JIT manufacturing and process costing, ABC
Iceland Company uses JIT manufacturing; several manufacturing cells are set up within one of its factories. One of the cells makes space heaters; the cost of production for the month of March is as follows:
Cell labor $ 20,000
Direct materials 50,000
During the March, 10,000 space heaters were produced and sold.
1. Explain why process costing can be used for computing the cost of production for space heaters
2. Calculate the cost per unit for a space heater
1. Explain why process costing can be used for computing the cost of production for space heaters:
Process costing is used when products are produced in large volume and are homogenous so that each unit ...
The solution explains the use of process costing and calculation of cost per unit.