Adria Company recently implemented an activity-based costing system. At the beginning of the year, management m the following estimates of cost and activity in the company's five activity cost pools: Activity Cost Pool Labor-related Purchase orders Material receipts Relay assembly General factory Problem 4-18 Part 1 Activity Cost Pool Labor-related Required: 1. Compute the activity rate for each of the activity cost pools. Purchase orders Material receipts Relay assembly General factory Activity Rate Activity Measure Direct labor-hours Number of orders Number of receipts. Number of relays Machine-hours per DLH per order per receipt per relay per MH Expected Overhead Cost $ 34,000 $ 3,500 $ 9,000 $ 15,000 $205,000 Assessment Tool iFrame Expected Activity 8,500 DLHS 3,500 orders 900 receipts 2,500 relays 41,000 MHS
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.
The overhead rate is calculated as estimated overhead cost divided by estimated base activity. The overhead is applied to the production on the basis of predetermined overhead rate.
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