Company manufactured 100 units of Product-A and 600 units of Product-B and uses ABC costing Total manufacturing overhead costs incurred: $ 101,500 ACTIVITIES COST DRIVER MOH COST POOL OF EACH ACTIVITY TOTAL AMOUNT ‘1. Materials handling Number of requisitions $ 40,000 ‘2. Machine setups Number of setups $ 31,500 ‘3. Quality inspection Number of inspections $ 30,000 TOTAL $101,500 PRODUCT A PRODUCT B Number of requisitions used/product 400 600 Number of setups used/product 150 300 Number of inspections used/product 200 400 Calculate the cost per unit of cost driver for each MOH cost pool: Materials handling $____________ Machine setups $____________ Quality inspection $____________ 2. Compute the total manufacturing overhead cost of Product A and Product B under the activity-based costing system: Total MOH cost for Product- A: $____________ Total MOH cost for Product- B: $____________
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.
Company manufactured 100 units of Product-A and 600 units of Product-B and uses ABC
Total manufacturing
ACTIVITIES COST DRIVER MOH COST POOL OF EACH ACTIVITY
TOTAL AMOUNT
‘1. Materials handling Number of requisitions $ 40,000
‘2. Machine setups Number of setups $ 31,500
‘3. Quality inspection Number of inspections $ 30,000
TOTAL $101,500
PRODUCT A PRODUCT B
Number of requisitions used/product 400 600
Number of setups used/product 150 300
Number of inspections used/product 200 400
- Calculate the cost per unit of cost driver for each MOH cost pool:
Materials handling $____________
Machine setups $____________
Quality inspection $____________
2. Compute the total manufacturing overhead cost of Product A and Product B under the activity-based costing system:
Total MOH cost for Product- A: $____________
Total MOH cost for Product- B: $____________
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