Al-Bustan Co. gathered the following information on total costs and factory machine usage for the last six months: Month Total cost Factory Machine Hours January 14,810 13,900 February 29,210 16,600 March 29,000 6,600 April 19,340 13,200 May 29,810 16,500 June 14,910 6,800 Instructions Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers. (a) What is the variable portion of the mixed costs? (b) What is the fixed portion of the mixed costs? (c) If it is estimated that 5,000 factory machine hours will be run in July, what is the expected total cost for July?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
- Al-Bustan Co. gathered the following information on total costs and factory machine usage for the last six months:
|
Month |
Total cost |
Factory Machine Hours |
|
January |
14,810 |
13,900 |
|
February |
29,210 |
16,600 |
|
March |
29,000 |
6,600 |
|
April |
19,340 |
13,200 |
|
May |
29,810 |
16,500 |
|
June |
14,910 |
6,800 |
Instructions
Using the high-low method of analyzing costs, answer the following questions and show computations to support your answers.
(a) What is the variable portion of the mixed costs?
(b) What is the fixed portion of the mixed costs?
(c) If it is estimated that 5,000 factory machine hours will be run in July, what is the expected total cost for July?
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