(a) What is meant by the term ‘specific order costing’?

(b) In what ways does specific order costing differ from process costing?

(c) The Acme Shelving Co. Ltd manufactures shelving brackets in batches of 300. During May, Batch No. 23 was machined at a rate of 15 per hour. Sixty of the brackets failed to pass inspection, but of these, 40 were thought to be rectifiable. The remaining 20 were scrapped, and the scrap value was credited to the batch cost account. Rectification work took nine hours.

Calculate:

(i) The cost of Batch No. 23 in total and per unit, if all units pass inspection;

(ii) The actual cost of Batch No. 23, in total and per unit, after crediting the recovery value of the scrapped components, and including the rectification costs;

(iii) The loss incurred because of defective work.

Transcribed Image Text:

Raw materials per bracket Scrap value per bracket Machinists' hourly rate Batch No. 23 Machine hour overhead rate (running time only) Setting up of machine: normal machining rectification £ 1.60 0.86 4.20 3.60 21.00 18.00