Activity Rates and Product Costs using Activity-Based Costing Lonsdale 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 $307,230 Machine hours 180,370 Direct labor hours 35,280 Number of inspections 43,120 Number of setups 49,220 Number of loads Activity Casting Assembly Inspecting Setup Materials handling 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: Activity Base Machine hours Direct labor hours Number of inspections Number of setups Number of loads Units produced Entry Dining 4,930 4,380 9,310 4,240 6,370 10,610 1,920 600 2,520 230 50 280 Total 850 220 1,070 9,800 4,900 14,700
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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![Activity Rates and Product Costs using Activity-Based Costing
Lonsdale 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:
Activity
Casting
Assembly
Inspecting
Budgeted
Activity Cost
$307,230
180,370
35,280
43,120
49,220
Activity Base
Machine hours
Direct labor hours
Number of inspections
Number of setups
Number of loads
Units produced
Setup
Materials handling
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:
Activity Base
Machine hours
Direct labor hours
Number of Inspections
Number of setups
Number of loads
Total
Entry Dining
4,930 4,380 9,310
6,370
10,610
600 2,520
50
280
220 1,070
9,800 4,900 14,700
4,240
1,920
230
850](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faed3de54-433a-4da2-b51c-03cbeee1d515%2F3f5984b3-d549-4452-b5d4-6196a034cba0%2Fy10d1il_processed.jpeg&w=3840&q=75)
![a. Determine the activity rate for each activity. If required, round the rate to the nearest dollar.
Activity Rate
Activity
Casting
per machine hour
Assembly
per direct labor hour
Inspecting
per inspection
Setup
per setup
Materials handling
per load
b. Use the activity rates in (a) to determine the total and per-unit activity costs associated with each product. Round the per unit amounts to the nearest cent.
Product
Total Activity Cost Activity Cost Per Unit
Entry Lighting Fixtures
Dining Room Lighting Fixtures](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faed3de54-433a-4da2-b51c-03cbeee1d515%2F3f5984b3-d549-4452-b5d4-6196a034cba0%2Fnipfr9_processed.jpeg&w=3840&q=75)
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