Calculating ABC Unit Costs Perkins National Bank has collected the following information for four activities and two types of credit cards: Activity Driver Classic Gold Activity Rate ($) Processing transactions Transactions processed 12,000 7,200 0.20 Preparing statements Number of statements 12,000 7,200 0.95 Answering questions Number of calls 24,000 36,000 4.00 Providing ATMs ATM transactions 48,000 14,400 1.50 There are 4,900 holders of Classic cards and 20,400 holders of Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. Unit cost for Classic: Unit cost for Gold:
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Calculating ABC Unit Costs
Perkins National Bank has collected the following information for four activities and two types of credit cards:
| Activity | Driver | Classic | Gold | Activity Rate ($) |
| Processing transactions | Transactions processed | 12,000 | 7,200 | 0.20 |
| Preparing statements | Number of statements | 12,000 | 7,200 | 0.95 |
| Answering questions | Number of calls | 24,000 | 36,000 | 4.00 |
| Providing ATMs | ATM transactions | 48,000 | 14,400 | 1.50 |
There are 4,900 holders of Classic cards and 20,400 holders of Gold cards.
Required:
Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards.
Unit cost for Classic:
Unit cost for Gold:
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