Berg Industries, a family-run small manufacturer, has adopted an ABC costing system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: Activity Estimated Total Manufacturing Overhead Costs Estimated Total Usage of Cost Driver Machine set-up ............................................ $ 150,000 3,000 set-ups Machining..................................................... $1,000,000 5,000 machine hours Quality control............................................. $ 337,500 4,500 tests run During May, Evan and Sajiah Berg machined and assembled Job 624. Evan worked a total of 10 hours on the job, while Sajiah worked 5 hours on the job. Evan is paid a $25 per hour wage rate, while Sajiah is paid $30 per hour because of her additional experience level. Direct materials requisitioned for Job 624 totalled $1,050. The following additional information was collected on Job 624: The job required 1 machine set-up, 5 machine hours, and 2 quality control tests. Compute the activity cost allocation rates for the year. Complete the following job cost record for Job 624:
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Berg Industries, a family-run small manufacturer, has adopted an ABC costing system. The following manufacturing activities, indirect
Activity Estimated Total Manufacturing
Machine set-up ............................................ $ 150,000 3,000 set-ups
Machining..................................................... $1,000,000 5,000 machine hours
Quality control............................................. $ 337,500 4,500 tests run
During May, Evan and Sajiah Berg machined and assembled Job 624. Evan worked a total of 10 hours on the job, while Sajiah worked 5 hours on the job. Evan is paid a $25 per hour wage rate, while Sajiah is paid $30 per hour because of her additional experience level. Direct materials requisitioned for Job 624 totalled $1,050. The following additional information was collected on Job 624: The job required 1 machine set-up, 5 machine hours, and 2 quality control tests.
Compute the activity cost allocation rates for the year.
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