Chrzan, Inc., manufactures and sells two products: Product E0 and Product N0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours Product E0 330 9.3 3,069 Product N0 1,150 8.3 9,545 Total direct labor-hours 12,614 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product E0 Product N0 Total Labor-related DLHs $ 297,890 3,069 9,545 12,614 Production orders orders 57,087 450 550 1,000 Order size MHs 581,366 5,150 4,850 10,000 $ 936,343 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: Multiple Choice A. $57.09 per MH B. $58.14 per MH C. $74.23 per MH D. $31.21 per MH
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.
Chrzan, Inc., manufactures and sells two products: Product E0 and Product N0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
| Expected Production | Direct Labor-Hours Per Unit | Total Direct Labor-Hours | |
| Product E0 | 330 | 9.3 | 3,069 |
| Product N0 | 1,150 | 8.3 | 9,545 |
| Total direct labor-hours | 12,614 | ||
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
| Estimated | Expected Activity | |||||
| Activity Cost Pools | Activity Measures | Product E0 | Product N0 | Total | ||
| Labor-related | DLHs | $ | 297,890 | 3,069 | 9,545 | 12,614 |
| Production orders | orders | 57,087 | 450 | 550 | 1,000 | |
| Order size | MHs | 581,366 | 5,150 | 4,850 | 10,000 | |
| $ | 936,343 | |||||
The activity rate for the Order Size activity cost pool under activity-based costing is closest to:
Multiple Choice
In activity based costing, all overhead costs will be allocated on the basis of activities on the basis of cost drivers.
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