Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.
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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Traditional Product Costing Versus Activity-Based Costing
Assume that Panasonic Company has determined its estimated total
|
Activity Centers |
Activity Costs |
Cost Drivers |
Activity Level |
|---|---|---|---|
| Assembly setups | $39,000 |
Setup hours |
1,500 |
| Materials handling | 9,000 |
Number of moves |
300 |
| Assembly | 120,000 |
Assembly hours |
12,000 |
| Maintenance | 24,000 | Maintenance hours | 1,200 |
| Total | $192,000 |
Total direct labor hours used during the month were 8,000. Panasonic produces many different electronic products, including the following two products produced during the current month:
| Model X301 | Model Z205 | |
|---|---|---|
| Units produced | 1,000 | 1,000 |
| Direct materials costs | $9,000 | $9,000 |
| Direct labor costs | $6,500 | $6,500 |
| Direct labor hours | 500 | 500 |
| Setup hours | 50 | 100 |
| Materials moves | 25 | 50 |
| Assembly hours | 800 | 800 |
| Maintenance hours | 10 | 40 |
a. Calculate the total per-unit cost of each model using direct labor hours to assign manufacturing overhead to products.
Round rate to two decimal places.
Overhead rate per direct labor hour $Answer
Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.
| X301 | Z205 | |
|---|---|---|
| Direct materials | Answer
|
Answer
|
| Direct labor | Answer
|
Answer
|
| Overhead cost | Answer
|
Answer
|
| Total cost | Answer
|
Answer
|
| Units | Answer
|
Answer
|
| Per unit cost | Answer
|
Answer
|
b. Calculate the total per-unit cost of each model using activity-based costing to assign manufacturing overhead to products.
| Assembly setups |
Answer |
| Materials handling |
Answer |
| Assembly |
Answer |
| Maintenance |
Answer |
Round cost per unit to two decimal places, if needed.
| X301 | Z205 | |
|---|---|---|
| Direct materials cost | Answer
|
Answer
|
| Direct labor cost | Answer
|
Answer
|
| Manufacturing overhead costs: | ||
| Assembly setup | Answer
|
Answer
|
| Materials handling | Answer
|
Answer
|
| Assembly | Answer
|
Answer
|
| Maintenance | Answer
|
Answer
|
| Total cost | Answer
|
Answer
|
| Units | Answer
|
Answer
|
| Per unit cost | Answer
|
Answer
|
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