Body-Solid Inc. manufactures elliptical exercise machines and treadmills. The products are prouced in its Fabrication and Assembly production departments. In addition t production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Fabrication Assembly Setup Inspecting Production scheduling Purchasing $57 per setup $29 per inspection $13 per production order $10 per purchase order The activity-base usage quantities and units produced for each product were as follows: Elliptical Machines Activity Base Machine hours Direct labor hours Setups Activity Rate $21 per machine hour $12 per direct labor hour Inspections Production orders Purchase orders Units produced 1,692 399 58 735 65 188 277 Treadmill 998 156 18 441 4 13 115 186
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.
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