Nov 2019 Q3 b.
State and explain FIVE (5) features of specific order costing methods used in cost ascertainment. (5 marks)
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- A specific order is carried out or a product is produced is produced to meet the specific requirements of the order
- Specific order costing enables a business to ascertain the cost of a job order on the basis of which quotation for the specific order may be given.
- While computing the cost, direct costs are charged to the job order directly as they are traceable to the job order.
- Indirect expenses i.e. overheads are charged to the job order on some suitable basis.
- Each specific order completed may be different from other specific orders and hence it is difficult to have standardization of controls and therefore more detailed supervision and control is necessary.
- At the end of the accounting period, work in progress may or may not exist. (Any 5)