Production Cost and Control

0PRODUCTION COST AND CONTROL
Production Cost and Control
Name of the Student:
Name of the University:
Author Note:

1PRODUCTION COST AND CONTROL
Table of Contents
Answer 2..........................................................................................................................................2
Answer 5..........................................................................................................................................2
Answer 7..........................................................................................................................................3
Answer 8..........................................................................................................................................3
Reference:........................................................................................................................................5

2PRODUCTION COST AND CONTROL
Answer 2
The overhead cost is measured through two method one is ABC Costing and other is
Traditional method also known as Absorption Costing. Manufacturing overhead costs indicates
to the cost in a manufacturing concern other than direct labor and material. Total output increases
the variable manufacture overhead costs. In tradition method, cost is calculated on annually basis
starting of the financial year. In this method, estimation that is concluded from analyzing the
past overhead costs a prearranged overhead rate. Grounded on historical yearly overhead costs,
organization would approximation entire overhead costs for the present year. Grounded on
previous yearly working movement, organization would guesstimate entire operating action for
the existing year. The operating motion would be an action sordid, such as direct labor hours or
machine hours or direct labor cost. Using these estimations, the prearranged overhead rate equals
assessed entire yearly overhead costs alienated by assessed entire annual operating action. This
technique of absorbing overhead is utmost suitable in a labor-intensive cost center. Furthermore,
it is easy to practice. Today, utmost manufacture approaches comprise considerable use of
equipment and so the labor period technique may develop progressively unsuitable. Therefore,
direct labor hour is a good choice for a variable overhead activity measurement about California
Car Company. ( Mahal & Hossain , 2015).
Answer 5
In absorption costing direct materials come under production head, and after that cost of
direct materials are reassigned to work in progress account (WIP) from raw material account. In
case of direct labor cost, as these costs are incurred they are transacted under expenses head. As
the wages are paid to the labor during the year those payment amount are assigned to work in