Activity rates and product costs using activity-based cost Idris Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Budgeted Activity Cost Activity Base Machine hours Direct labor hours Activity Casting $300,700 Assembly 188,020 Inspecting 30,800 Setup 44,400 Materials handling 51,230 Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Number of inspections Number of setups Activity Base Machine hours Entry 5,140 4,420 1,670 240 860 Direct labor hours Number of inspections Number of setups Number of loads Dining 4,560 6,640 Total 9,700 11,060 2,200 300 530 60 Number of loads 230 Units produced 10,200 5,100 a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar. 1,090 15,300
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.
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