21) Rivera Company manufactured two products, A and B, during April. For purposes of product costing, an overhead rate of $2.00 per direct-labor hour was used, based on budgeted annual factory overhead of $500,000 and 250,000 budgeted annual direct-labor hours, as follows: Budgeted Overhead Budgeted Hours Department 1 S 300,000 200,000 Department 2 200,000 50,000 S 500,000 250,000 The number of labor hours required to manufacture each of these products was: Product A Product B In Department 131 In Department 213 Total 4 4 During April, production units for products A and B were 1,000 and 3,000, respectively. Required: (1) Using a plantwide overhead rate, what are total overhead costs assigned to products A and B, respectively? (2) Using departmental overhead rates, what are total overhead costs assigned to products A and B, respectively? (3) Assume that materials and labor costs per unit of Product B are $10 and that the selling price is established by adding 40% of total costs to cover profit and selling and administrative expenses. What difference in selling price would result from the use of departmental overhead rates?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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