Session 5 - Methods of Costing Flashcards
What is the prime cost of production?
Direct materials + Direct Labour
How to work out marginal cost?
Prime cost + varibale production overheads
How to work out absorption cost?
Marginal cost + Fixed production overheads
How to work out total cost?
Absorption cost + Fixed Non- Production overheads
Fixed non production overheads include?
Admin, Selling and Distribution
What is job costing?
Used where the product of service is a “one off”
For example: Making one racing bike or preparing one clients accounts
What is batch costing?
Used where the output consists of a number of identical items which are produced together as a batch.
For example: Baking a batch of loaves
What is service costing?
Method of costing for services eg: running a bus
What is unit costing?
Method of costing for continuous manufacturing processes
What are 3 features of service costing?
Low level of direct materials in relation to total costs
Intangible output
Use of composite units eg: per passenger/mile
What is the calculation for cost per service unit?
Total costs of providing service/number of service units
What is the calculation for cost per unit for unit costing?
Total costs of production/number of units for period
What is the calculation of equivilent units?
Number of units in progress x completeness (%)
What is the calculation for cost per unit for unit costing including equivalent units?
Total cost for production/(number of completed units + equivalent units)
What is abnormal wastage?
Any additional waste which aries from normal wastage.
Actual loss - normal loss