Unit costing is calculations for a unit piece in manufacturing in organizations.
Following are the top Unit Costing Question Answers (Cost Accounting).
Unit Costing Problems and Solutions
1. Define unit cost?
Unit cost refers unit of production or service for which costs are ascertained and expressed.
2. What is the Unit Costing method?
It is a method of costing and is adopted where manufacturing determination of cost per unit is required.
3. Give two main assumptions of unit and output costing method?
The main assumption of the unit costing method are:
- Production involves only a single process or operation.
- The unit of output is identical.
4. Write down the Names of Methods of Unit costing?
These are the cost sheet, statement of cost, and production account.
5. What is Cost Sheet?
It is a schedule that provides information regarding the quantity of production total cost of production, the total cost of a product, and cost per unit.
6. What is the production account?
The production account reveals the cost of production in an analytical manner according to the double entry system.
7. State the name of four industries where unit costing is applied?
Unit costing methods are used in the Brick industry, Coal industry, Paper industry, Tea industry, Breweries industry, and Cement industry.
8. How scrap or wastage is the treatment of scrap made?
Scrap is a residual portion of the material that remains at the end of the manufacturing process and cannot be further processed its sale value can be deducted from the cost of material or overhead.
9. What is the tender price?
The tender price is an estimated selling price ascertained and informed to the probable buyer prior to procuring the production order.
10. What is the cost sheet? How does it differ from a production account?
It is a schedule that provides information regarding the quantity of production and total cost of a product and the cost per unit production account reveals the cost of production in a manner according to the double entry system.
11. What is the difference between the production cost of goods sold and the cost of production?
Cost of production can be ascertained by adding administrative cost to working cost when the opening stock of finished goods is added to the production cost of goods sold and closing stock is deducted from the sum than the cost of production is ascertained.
12. What Are the Objects of the unit costing method?
The objects of unit costing are:
- To ascertain the total cost and cost per unit
- Analyze expenses for unit cost,
- To comparative study.
- Find out the proportion of expenses in respect of each element of cost,
- To provide the basis for the determination of the selling price.
- To determine the tender price.
13. What is the Procedure to Prepare a production Account?
Production account is based upon a double entry system cost of production and profit or loss can be ascertained and is prepared in two parts.
The First part of the debit side of the production account exhibit production cost under different heads.
In the Second part opening and closing stock of work-in-progress is adjusted in of debit and credit side of the account opening stock of finished goods is shown on the debit side while closing stock is shown on the credit side. The amount of sales is recorded on the credit side and the difference on both sides is ascertained.
If the total of the credit side is more than the debit side it is profit otherwise it is the loss.