Barton Carts produces two models of push carts, the Standard and the Deluxe. Data on operations and costs for the month are: Standard Deluxe Total Machine hours 16,000 8,000 24,000 Direct labor hours 12,000 8,000 20,000 Units produced 4,000 1,000 5,000 Direct material costs $ 80,000 $ 30,000 $ 110,000 Direct labor costs 262,000 138,000 400,000 Manufacturing overhead costs 557,400 Total costs $ 1,067,400 Required: Compute the total cost for each model, assuming Barton Carts uses: (a) Direct labor hours to allocate overhead costs. (b) Direct labor costs to allocate overhead costs. (c) Machine hours to allocate overhead costs.
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.
Barton Carts produces two models of push carts, the Standard and the Deluxe. Data on operations and costs for the month are:
| Standard | Deluxe | Total | |||||||
| Machine hours | 16,000 | 8,000 | 24,000 | ||||||
| Direct labor hours | 12,000 | 8,000 | 20,000 | ||||||
| Units produced | 4,000 | 1,000 | 5,000 | ||||||
| Direct material costs | $ | 80,000 | $ | 30,000 | $ | 110,000 | |||
| Direct labor costs | 262,000 | 138,000 | 400,000 | ||||||
| 557,400 | |||||||||
| Total costs | $ | 1,067,400 | |||||||
Required:
Compute the total cost for each model, assuming Barton Carts uses:
(a) Direct labor hours to allocate overhead costs.
(b) Direct labor costs to allocate overhead costs.
(c) Machine hours to allocate overhead costs.
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