Budgeted Quantity of Activity Driver Budgeted Overhead $ 28,500 Activity Driver Purchase orders processed Purchasing Material handling 1,500 47,700 Material moves 5,300 Machine maintenance 100,000 Machine-hours 10,000 Product inspection Packaging Inspections Units produced 6,800 1,700 13,200 3,300 $196,200 Information related to Job 220 and Job 330 follows. Job 220 incurs more batch-level costs because it uses more types of materials that need to be purchased, moved, and inspected relative to Job 330. Job 220 Job 330 Number of purchase orders 21 Number of material moves 18 6 Machine-hours 30 70 Number of inspections Units produced 10 17 5 1. Compute the total overhead allocated to each job under a simple costing system, where overhead is allocated based on machine-hours. Required 2. Compute the total overhead allocated to each job under an activity-based costing system using the appropriate activity drivers. 3. Explain why Melody's Custom Framing might favor the ABC job-costing system over the simple job- costing system, especially in its bidding process.
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.
Activity-based costing. The
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