Assume that a company makes only three products: Product A. Product B. and Product C. Currently, the company uses a conventional cost system that relies on plantwide overhead cost allocation based on direct labor-hours. It is considering replacing its conventional cost system with an activity-based costing (ABC system. The ABC system would include a total of four activities: Assembly (allocated to products based on direct labor-hours), Machine Setups (allocated to products based on number of setups), Material Handling (allocated to products based on the number of material moves), and Product Design (allocated to products based on the number of products). Product C 2,eee units 2 hours 20 setups Product A Product B 7,000 units Number of units produced Direct labor hours per unit Number of setups Number of material moves 1,eee units 2 hours se setups 2 hours 30 setups 6e0 moves 4ee moves 200 moves Number of products 1 product 1 product 1 product Using the plantwide approach, what percent of the company's total overhead cost would be allocated to Product A? Multiple Choice 33% 10% 25% 15% O O O O
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images