Activity Cost Pools Total Cost Customer Orders Product Development Customer Relations Other Total Production Department: Indirect factory wages $400,000 50% 30% 15% 5% 100% Factory equipment depreciation 150,000 55% 30% 0% 15% 100% Factory utilities 120,000 59% 34% 0% 7% 100% Factory property taxes and insurance 75,000 57% 33% 0% 10% 100% General Administrative Department: Administrative wages and salaries 275,000 20% 10% 40% 30% 100% Office equipment depreciation 40,000 32% 16% 15% 37% 100% Adminstrative property taxes and insurance 60,000 0% 0% 0% 100% 100% Marketing Department: Marketing wages and salaries 150,000 20% 10% 40% 30% 100% Selling expenses 100,000 32% 16% 15% 37% 100% Required: Use the data to complete a First-Stage
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 Cost Pools | ||||||
| Total Cost | Customer Orders | Product Development | Customer Relations | Other | Total | |
| Production Department: | ||||||
| Indirect factory wages | $400,000 | 50% | 30% | 15% | 5% | 100% |
| Factory equipment |
150,000 | 55% | 30% | 0% | 15% | 100% |
| Factory utilities | 120,000 | 59% | 34% | 0% | 7% | 100% |
| Factory property taxes and insurance | 75,000 | 57% | 33% | 0% | 10% | 100% |
| General Administrative Department: | ||||||
| Administrative wages and salaries | 275,000 | 20% | 10% | 40% | 30% | 100% |
| Office equipment depreciation | 40,000 | 32% | 16% | 15% | 37% | 100% |
| Adminstrative property taxes and insurance | 60,000 | 0% | 0% | 0% | 100% | 100% |
| Marketing Department: | ||||||
| Marketing wages and salaries | 150,000 | 20% | 10% | 40% | 30% | 100% |
| Selling expenses | 100,000 | 32% | 16% | 15% | 37% | 100% |
| Required: | ||||||
| Use the data to complete a First-Stage Allocation to Activity Cost Pools. |
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