All Things Auto uses an activity-based costing system to assign costs in its auto-parts division. Activity Allocation base Cost allocation rate Est. Indirect Activity Costs Materials Assembling Packaging Material moves $56,000 $195,000 $50,000 Direct labor hours # of finished units The following units were produced in December with the following information: Part # Part 001 Part 002 Part 003 Total manufacturing costs for Part 001 is O $8700 O $7775 O $6200 O $10,275 # Produced 1050 5500 4050 Materials Costs $2500 $4000 $7000 $5.00/move $7.00/dir. labor hour $1.50/finished unit #Moves 400 500 2200 Dir. Labor Hrs. 600 200 1450
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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