c. Compute the unit cost of each model of backpack using the department allocation rates computed in requirement (b) (labor-hours in Department 1 and machine-hours in Department 2). Note: Do not round your intermediate calculations.
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.
Dd2.
How do you solve C for leather?
![Trombly Travel Products (TTP) manufactures and sells travel bags and accessories. TTP produces backpacks at its West Street plant.
The different backpack models are identified by the primary material used: canvas, nylon, or leather. The company uses a plantwide
rate based on direct labor-hours. The plantwide rate is $5.00 per labor-hour. All direct labor at TTP is paid $39 per hour. Canvas and
nylon backpacks are produced in Department 1. Leather backpacks are produced in Department 2. The product costs (per backpack)
follow.
Direct materials
Direct labor
Canvas
$ 34.00
113.10
Overhead
Machine-hours
Labor-hours
Nylon
$39.00
132.60
Leather
$ 49.00
140.40
Required:
a. Compute the total unit cost of each backpack model using the plantwide allocation method.
b. The machines in Department 1 are older and almost fully depreciated. The equipment in Department 2 was recently updated and
the process in Department 2 is more highly automated. At the request of the manager of Department 1, a cost analyst at TTP
provided the following information on overhead costs, machine-hours and direct labor-hours for the two departments.
Department 1 Department 2
$ 87,320
$ 110,080
17,800
23,600
25,600
12,800
Using labor-hours as the department allocation base for Department 1 and machine-hours as the department allocation base for
Department 2, compute the allocation rate for each.
c. Compute the unit cost of each model of backpack using the department allocation rates computed in requirement (b) (labor-hours in
Department 1 and machine-hours in Department 2).
Note: Do not round your intermediate calculations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F42c1a7d5-eddb-4543-8d31-9149ae65cc6b%2F997f87c4-bc49-4986-9561-d15c2f99c382%2Fh43bbp_processed.png&w=3840&q=75)
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