Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Overhead Costs: Indirect labor $ 245,000 Depreciation 205,000 Utilities 137,000 Total $ 587,000
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.
Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:
| Indirect labor | $ | 245,000 | |
| 205,000 | |||
| Utilities | 137,000 | ||
| Total | $ | 587,000 | |
Distribution of resource consumption:
| Activity Cost Pools | ||||||||||||||
| Assembly | Setting Up | Other | Total | |||||||||||
| Indirect labor | 55 | % | 20 | % | 25 | % | 100 | % | ||||||
| Depreciation | 25 | % | 35 | % | 40 | % | 100 | % | ||||||
| Utilities | 20 | % | 40 | % | 40 | % | 100 | % | ||||||
How much overhead cost, in total, would be allocated to the Setting Up activity cost pool?
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