5) Ben Corporation manufactures two products: Product E05G and Product L64Y. The company uses a plantwide overhead rate based on direct labor-hours. It is considering mplementing an activity-based costing (ABC) system that allocates its manufacturing overheaw co four cost pools. The following additional information is available for the company as a whola and for Products E05G and L64Y. Activity Cost Pool Machining Machine setups Product design General factory Activity Measure Machine-hours Number of setups Number of products Direct labor-hours Total Activity $ 285,000 15,000 MHs Total Cost $ 180,000 300 setups $ 64,000 S 350,000 10,000 DLHS 2 products Activity Measure Machine-hours Product E0SG 12,000 170 Product L64Y 3,000 130 Number of setups Number of products Direct labor-hours 3.000 7,000 Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to Product E05G is closest to: A) 27.87% B) 19.00% C) 30.00% D) 50.00%
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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