12 - Job and batch costing Flashcards
what is job costing and its features
single order/contract
- according to customer specifications
- short duration
- non homogeneous products
how are unexpected costs treated, rectification costs
= costs to correct substandard work
if they are unusual, charge directly to the job as direct cost
if they are common, treat as part of production OH and absorb across all jobs
what is the full production cost made up of
direct materials (x kg X price)
direct labour (x hours X rate p/h)
production overhead (x direct labour hrs X OAR)
selling and distribution costs
how to calculate variable and fixed overheads
VARIABLE = direct labour hours x recovery rate per direct labour hour
FIXED = direct labour hours x OAR
what is included in a batch costing
actual material cost
actual labour cost
absorbed manufacturing overheads
cost per unit in batch costing
total batch cost / no of units in the batch
all articles are separately identifiable
what is internal job costing
where the cost of a specific internal job is charged to a user department
what are job costing systems used for
used to control costs of internal service departments eg maintenance
instead of apportionment, each job done is charged to individual user department
advantages of internal job costing systems
- realistic apportionment
- increased responsibility and awareness
- control of service department costs
- budget information
actual amount of hours formula
active labour hours / idle time as a decimal
eg
active hrs = 380
idle time = 5%
actual hours = 380 / 0.95
= 400
ALWAYS DIVIDE IDLE TIME TO ADD IT ON TOP
full absorption cost
direct material
direct labour
variable OH
fixed OH
full marginal cost
direct material
direct labour
variable OH
