A) what is the customer margin under activity based costing when the number of orders increases to 12? B) what is the product margin under the traditional costing system when the number of orders increase to 12?
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) what is the customer margin under activity based costing when the number of orders increases to 12?
B) what is the product margin under the traditional costing system when the number of orders increase to 12?
![Chapter 7: (Algo) Applying Excel: Exercise (Part 2 of 2)
2. Assume that OfficeMart places orders more frequently, but everything else remains the same. On your worksheet increas
number of orders from 4 to 12. (Prior to completing this requirement, change all worksheet figures back to their original a
Chapter 7: Applying Excel
Data
Manufacturing overhead
500,000
Selling and administrative overhead
300,000
Assembling
Units
Processing
Orders
Supporting
Customers
Other
Manufacturing overhead
50%
35%
5%
10%
Selling and administrative overhead
10%
45%
25%
20%
10 Total activity
1,000
250
100
11
units
orders
Customers
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Required information
8.
Manufacturing overhead
50%
35%
5%
10%
9.
Selling and administrative overhead
10%
45%
25%
20%
10 Total activity
1,000
250
100
11
units
orders
customers
12
13 OfficeMart orders:
14 Customers
1 customer
15 Orders
12 orders
16 Number of filing cabinets ordered in total
80 units
17 Selling price
2$
595
18
Direct materials
2$
180
19
Direct labor
$
50
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- Activity based costing is a process of assigning overall job costs into different products/services on the basis of different cost drivers.
- Traditional based costing is a process of allocation of manufacturing overheads to the units based on the overall production.
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