based on setup labor-hours and general manufacturing overhead costs on the basis of direct manufacturing labor-hours. It provides the following budgeted cost information: Basic Lamps Designer Lamps Total Direct materials per lamp $9 $15 Direct manufacturing labor-hours per lamp 0.5 hours 0.6 hours Direct manufacturing labor rate per hour $20 $20 Setup costs $114,000 Lamps produced per batch 250 50 Setup-hours per batch 1 hour 3 hours General manufacturing overhead costs $120,000 Calculate the total budgeted costs of the basic and designer lamps using Amherst’s activitybased costing system.
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.
5-2 Amherst Metal Works produces two types of metal lamps. Amherst manufactures
20,000 basic lamps and 5,000 designer lamps. Its activity-based costing system uses
two indirect-cost pools. One cost pool is for setup costs and the other for general
manufacturing
setup labor-hours and general
Basic Lamps Designer Lamps Total
Direct materials per lamp $9 $15
Direct manufacturing labor-hours per lamp 0.5 hours 0.6 hours
Direct manufacturing labor rate per hour $20 $20
Setup costs $114,000
Lamps produced per batch 250 50
Setup-hours per batch 1 hour 3 hours
General manufacturing overhead costs $120,000
Calculate the total budgeted costs of the basic and designer lamps using Amherst’s activitybased costing system.
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