Job, Batch, and Service Costing – ACCA Management Accounting (MA)
Reader Interactions
Comments
Leave a Reply
You must be logged in to post a comment.
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
20% off ACCA & CIMA Books
OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>
Hi John.
First, thank you for these excellent lectures and this wonderful platform. My question is the same as I’ve seen a few others ask on the final example:
I agree with the mathematics you have done on the “cost per kilogram kilometre” making logical sense, but I don’t think the way you have written the units is mathematically correct.
“cost per kilogram kilometre” = $ / kgkm
What you’ve written in lecture and notes “Cost per kg/km” = “cost per kilogram per kilometre”
Please could you let me know if you agree?
For the exam it can be written either way 馃檪
Hi John,
Why did you divide the units (kg/km), rather than multiply them (kg 路 km)?
150,000 kg 脳 6000 km = 900,000,000 kg 路 km
Thank you.
When we divide total cost (in dollars) by the total weight-distance (in kg路km), we鈥檙e distributing the cost over both dimensions: weight (kg) and distance (km).
The result, $/kg/km, means:
Cost per kilogram per kilometer.
This happens because the cost is shared across both factors (kg and km) separately, not as a single unit.
If we left it as $/kg路km, it would treat kg路km as a single unit and lose the interpretation of “separately per kg and per km.”
By writing $/kg/km, we emphasize that the cost applies independently to:
Each kilogram of weight.
Each kilometer of travel.
I am a student too, but hope this helps.
Sir, Set-up costs are included as direct expense in batch cost right? Let’s suppose if there are two batches, will the set-up cost be included in every batch expense or included in the first batch only?
It depends on the rest of the question. If they are making several batches one after the other then there will be just one set-up cost. If they are making batches of different products then there will be a set-up cost for each batch.
Ok Sir, got it. Thankyou!
Hi sir,
I wanted to ask if it’s correct to divide 27 mil by 150 000 and then divide the answer which is 180 over 6000 km which equals 0.03 as well. I paused the video to answer it myself but it differs from your technique. is it still correct?
Yes, that is fine 馃檪
sir can you explain why you multiplied the excess baggage and the distance instead of dividing?
In ex 2,
when we calculate the cost per unit, we need to add non production cost and divide it by the units? Or without non production cost?
Normally, when a question asks for the production cost we only take the production costs and do not include any non-production costs.
Here we do include all costs (including non-production) because it is a ‘one-off’ special job. (Also the question does not ask for the production cost, it asks for the cost per unit produced. That might sound the same, but it isn’t – the cost per unit produced just means the cost per unit made.)
Thank you
And normally when the question asks for calculate the cost per unit, do we need add the production costs + non production costs and divide it by the units were produced or without non production cost?
In normal costing (i.e. not job costing) we do not include non-production overheads when calculating the production cost.
Got it.. Thank you so much ?
You are welcome 馃檪
150,000 kg x 6,000 km = 900,000,000 kg/km?
I thought it would be 150,000 kg / 6,000 km = 25kg/km
Then 108,000 ($27,000,000 / (25 kg/km)) is the cost per kg/km?
Thanks
No – that would make no sense.
You would expect the total cost to depend on the total weight AND the distance travelled. If either of them increases then you would expect the total cost to increase.
Sir, is it possible the unit should be kgkm and not kg/km?
I was thinking the same as CApeji, that the units are kgkm, rather than kg/km
love your classes. I really understand each topic just by listening in..