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Cost and Management Accounting PDF

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Added on  2020-11-30

Cost and Management Accounting PDF

   Added on 2020-11-30

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Name: I.L.EdirisinghaStudent No: HDIB/2019/014Assignment: Cost and Management AccountingUniversity Of Kelaniya
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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 assigningmanufacturing coststo the units produced. A processing cost system is used when nearly identical units are mass produced. (Job costing orjob order costingis a system used to collect and assign manufacturing costs to units that vary from one another.) Process costingis an accounting methodology that traces and accumulatesdirect costs, and allocatesindirectcostsof a manufacturing process. Costs are assigned to products, usually in a large batch, which might include an entire month's production. Eventually, costs have to be allocated to individual units of product. It assigns average costs to each unit, and is the opposite extreme ofJob costingwhich attempts to measure individual costs of production of each unit. Process costing is usually a significant chapter. It is a method of assigning costs to units of production 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 of which 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 its own 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 and across 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 nature and design.Example: Pharmaceuticals, Produce Soldiers shoes
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Question 02-Gamini manufactures sets up as a manufacturing business in Sri-Lanka. The budgeted selling price 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 is 10000 per month.For the months of January to June the production and sales were 10000 per month as budgeted. In the month of July 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
Cost and Management Accounting PDF_3

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