A local picnic table manufacturer has budgeted these overhead costs - ERROR: "Handling materials" is $33,350 - (note their order as you will use the same order down below): Purchasing Handling materials Machine setups Inspections Utilities $70,000 33,333 70,500 25,500 45,000 They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown (again, note their order): Cost Driver Activity Orders Material moves Machine setups Number of inspections Square feet 700 1,334 15,000 5,000 180,000 Recent success has yielded an order for 1,000 tables. Assume direct labor costs per hour of $20. Determine how much the job would cost given the following activities (once more, note their order for the last worksheet): Activity Order (units) Direct materials 1,000 112,700 15,200 5,300 60 Machine hours Direct labor hours Number of purchase orders Number of material moves Number of machine setups Number of inspections Number of square feet occupied 800 100 450 8,000
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.
A local picnic table manufacturer has budgeted these
They are considering adapting ABC costing and have estimated the cost drivers for each pool as shown (again, note their order):
Recent success has yielded an order for 1,000 tables. Assume direct labor costs per hour of $20. Determine how much the
Using the following cost driver terms, complete the two worksheets below to:
| Number of material moves | Direct labor | Manufacturing overhead | Number of purchase orders |
| Number of machine setups | Number of inspections | Direct materials | Square feet occupied |
PLEASE NOTE: For activity levels, use commas as needed (i.e. 1,234). Activity rates are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56). All other dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
(1) calculate the overhead assigned rate (note their order from above):
| Overhead Cost Items | Estimated Overhead | Cost Driver | Activity Levels | Activity Rate |
|
Purchasing |
$70,000 | |||
| Handling materials | $33,350 | |||
|
Machine setups |
$70,500 | |||
|
Inspections |
$25,500 | |||
|
Utilities |
$45,000 |
(2) calculate the total order cost (again, note their order from above):
| Activity Cost Drivers | Activity Levels | Activity Rate | Assigned Costs |
| Total Order Cost |
Please fill in the chart as shown with terms provided
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