Cost and Management Accounting PDF

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Name: I.L.EdirisinghaStudent No: HDIB/2019/014Assignment: Cost and Management AccountingUniversity Of Kelaniya
Question 01-By using examples, explain the difference between process costing and specific order costing?Process costingProcess costing is a term used incost accountingto describe one method forcollecting an assigningmanufacturingcoststo the units produced. A processing cost system is used when nearly identical units are mass produced. (Jobcosting orjob order costingis a system used to collect and assign manufacturing costs to units that vary from oneanother.)Process costingis an accounting methodology that traces and accumulatesdirect costs, andallocatesindirectcostsof a manufacturing process. Costs are assigned to products, usually in a large batch, which might include anentire month's production. Eventually, costs have to be allocated to individual units of product. It assigns averagecosts to each unit, and is the opposite extreme ofJob costingwhich attempts to measure individual costs ofproduction of each unit. Process costing is usually a significant chapter. It is a method of assigning costs to units ofproduction in companies producing large quantities of homogeneous products.Examples of this include the chemicals and processes food, Coca-cola company produce drink.Specific Order CostingThe basic costing method applicable where the work consists of separate contracts, jobs or batches, each ofwhich is authorized by a special order or contract. The specific order costing is further classified into the following.1) Job Order costing: Under this method, costs are ascertained for each work order separately as each has itsown specification and scope. Tailor made products also get covered by this type of costing.Example: Repair of buildings, Painting, Cake Ordering, Advertising Company etc2) Contract costing:In this method costing is done for jobs that involve heavy expenditure and stretches over long period andacross different sites. It is also called as terminal costing.Example: Construction of roads and bridges, buildings etc3) Batch costing:Through this method the costing is done for units that are produced in batches that are uniform in natureand design.Example: Pharmaceuticals, Produce Soldiers shoes
Question 02-Gamini manufactures sets up as a manufacturing business in Sri-Lanka. The budgeted sellingprice and costs of its single product are as follows. Product as follows.Budgeted for one unitRs.Selling price 50Direct Material 20Direct Labor 7.50Variable product overhead 5Total variable cost 32.50The fixed production overhead cost for one month is budgeted as Rs.75000.The budgeted production volume is10000 per month.For the months of January to June the production and sales were 10000 per month as budgeted. In the month ofJuly the production was 9000 but the sale were only 8600 units.1. Prepare profit statements for month of July, in a columnar format, using.(a) Marginal costing(b) Absorption costing
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