Methods Of Costing Flashcards
A cost object is a unit of ?
Product, serivce or activity
Unit costing is the cost incurred to how many cost objects ?
U
One cost object
To work out the unit cost you need the cost of production or output and the number of cost units, what is the equation to work out the unit cost ?
Cost of production or output / number of cost units
What are the four unit costs that can be calculated ?
- Prime cost
- Marginal cost
- Absorption cost
- Total cost
If you add the direct materials to the direct labour what do you end up with ?
Prime costs
Prime costs plus the variable production overheads gives you ?
The marginal cost of production
Marginal costs plus the fixed production overheads gives you ?
The absorption cost of production
Absorption costs plus the fixed non-production overheads gives you ?
The total cost of production
How do you work out the prime costs ?
Direct materials + direct labour
How do you work out the marginal costs ?
Direct materials + direct labour + variable production overheads
aka
Prime costs + variable production overheads
How do you work out the absorption cost ?
Direct materials + Direct labour + Variable production overheads + fixed production overheads
aka
Marginal costs + fixed production overheads
How do you work out the Prime, Marginal, Absorption & Total cost of one unit ?
You divide the costs by however many units were produced
When a customer orders what they want before it is made, it is called ?
Specific order costing
True or false
With specific order costing the customer agrees to buy the product before the work is done ?
True
Job costing is a costing method used when………?
Each job can be seperatley identified from other jobs and costs are charged to the job
Batch costing is a costing method used when……….?
The output of the business costists of a number of identical items which are produced together as a batch.
