Approximately Relevant ABC Silven Company has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Expected Cost Setting up equipment Ordering materials $135,000 14,400 141,050 Machining Receiving 28,470 Silven produces two models of cell phones with the following expected activity demands: Model X Model Y 9,000 40 Units completed Number of setups Number of orders Machine hours Receiving hours Required: Model X Model Y 4,500 80 300 6,200 365 Activity Driver Activity Capacity Number of setups Number of orders Machine hours Receiving hours 600 4,650 730 1. Determine the total overhead assigned to each product using the four activity drivers. Total Overhead Assigned $ 184,890 ✔ 134,030 ✔ Model X Model Y 120 900 10,850 1,095 2. Determine the total overhead assigned to each model using the two most expensive activities. The costs of the two relatively inexpensive activities are allocated to the two expensive activities in prop costs. Round interim calculations to two decimal places and round your final answers to the nearest dollar. Total Overhead Assigned 197,094 X 121,826 X 3. Using ABC as the benchmark, calculate the percentage error. Round your answers to two decimal places.
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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