Operation Costing

Operation costing is not a new method but it is the technique to use the method of job costing, batch costing and process costing for calculating the cost of that business products whose production are operating day and night. So, all expenses in operation costing  are recurring in nature.  Operation costing is also useful where units of products are same and one or two type products are producing.

Two Important Things in Operation Costing

1. #  We can identify the units of production by different methods of unit measurements.

2. # Like job costing, we will calculate total cost by following formula

Direct Material + Direct labor + Direct Expenses + Overheads

or we can also calculate total operating cost with following formula


Fixed cost + Veriable cost

If the prices of material and labor  will increase, then we have facility to inflate cost in this operating cost.

Operation Costing Example

We can explain operating costing with following simple example:

Make Cost and Profit statement using operation costing for Popular gas cylinder manufacturing company. We are giving you following raw data.

Stock of material on 1-1-2009  Rs. 35000
Stock of material on 31-12-2009  Rs. 4900
Purchase of materials Rs. 52500
Direct Wages Rs. 95000
Factory expenses Rs. 17500
Establishment expenses Rs. 10000
Completed stock in hand on 1-1-2009 Rs. Nil
Completed stock in hand on 31-12-2009 Rs. 35000
Sales Rs. 189000

The number of gas cylinder manufactured during the year 2009 was 4000. The company wants to quote for a contract for the supply of 1000 gas cylinders during the year 2010. The gas cylinder to be quoted are of uniform quality and make and similar to those manufacturing in the previous year, but cost of materials has increased by 15% and  factory wages by 10%

Prepare a statement showing the price to be quoted to give the same percentage of net profit on turnover as was realised during the year 2009. Assuming that the cost per unit overhead will be same as in the previous year.




COMMENTS

Comments on this Website
.
Share above Content to Your Friends



Name

access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
false
ltr
item
Accounting Education: Operation Costing
Operation Costing
http://farm2.static.flickr.com/1188/5156675969_c69a710fa9_b.jpg
http://farm2.static.flickr.com/1188/5156675969_c69a710fa9_t.jpg
Accounting Education
http://www.svtuition.org/2010/11/operation-costing.html
http://www.svtuition.org/
http://www.svtuition.org/
http://www.svtuition.org/2010/11/operation-costing.html
true
2410664366776677676
UTF-8
Not found any lecture VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock