a. Determine an activity rate for each activity. Activity Rates Production Setup Procurement Quality Control Materials Management Activity cost + Activity base /setup /PO /inspection /component Activity rate b. Assign activity costs to each product and determine the unit activity cost, using the activity rates from part (a). Round unit cost to two decimal places. Custom Standard Setups Total Purchase Orders Total Inspections Total Components Total Total product cost Unit volume Unit cost C. Assume that each product required one direct labor hour per unit. Determine the per-unit cost if factory overhead is allocated on the basis of direct labor hours. Round your answer to two decimal places. per unit d. The custom product will consume more v materials management activities than will the standard product.
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.
Activity based costing has become widely used method for the allocation of overhead though its complex in terms of identifying of related activities to the cost but it promises to provide accuracy.
Activity rate = Activity cost/Activity base
Unit cost = Total Product cost/unit volume
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