Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. Activity Est. Indirect Activity Cost Allocation base Cost allocation rate Materials $60,000 Material moves $5.00/move Assembling $175,000 Direct labor hours $5.00/dir. labor hour Packaging $70,000 # of finished units $2.50/finished unit The following units were produced in December with the following information: Part # # Produced Materials Costs # Moves Dir. Labor Hrs. Part 001 1,250 $2,500 100 200 Part 002 3,500 $6,000 500 300 Part 003 3,750 $7,000 2,500 1,250 Total manufacturing costs for Part 002 is Select one: a. $4,000 b. $18,750 c. $10,000 d. $12,750 e. $15,500
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.
Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division.
|
Activity |
Est. Indirect Activity Cost |
Allocation base |
Cost allocation rate |
|
Materials |
$60,000 |
Material moves |
$5.00/move |
|
Assembling |
$175,000 |
Direct labor hours |
$5.00/dir. labor hour |
|
Packaging |
$70,000 |
# of finished units |
$2.50/finished unit |
The following units were produced in December with the following information:
|
Part # |
# Produced |
Materials Costs |
# Moves |
Dir. Labor Hrs. |
|
Part 001 |
1,250 |
$2,500 |
100 |
200 |
|
Part 002 |
3,500 |
$6,000 |
500 |
300 |
|
Part 003 |
3,750 |
$7,000 |
2,500 |
1,250 |
Total
Manufacturing cost: The manufacturing cost includes all the expenses relating to the manufacturing department like direct material, direct labor, direct moves and packing cost.
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