cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each. Actual Activity Usage Setups Parts Inspections Required 1 Required 2 Complete this question by entering your answers in the tabs below. Per Unit Using a plantwide overhead rate based on 4,500 direct labor hours, compute the total product cost per unit for each product. Product Cost per Unit Product A Product B Required 1 Required 2 Direct Materials Machine setup Parts handling Quality inspection a. Compute overhead activity rates Activity Product A 8 setups 10,000 parts 40 inspections Direct Labor Activity Machine setup Parts handling Quality inspection Total allocated cost Units produced Product A Product B Consider the following additional information about these two products. If activity-based costing is used to allocate overhead cost, (a) compute overhead activity rates, (b) allocate overhead cost to Product A and Product B and compute overhead cost per unit for each, and (c) compute product cost per unit for each. Note: Round your final answers to 2 decimal places. Overhead < Required 1 per setup per part per inspection b. Allocate overhead to Product A, B and compute overhead cost per unit Allocated Cost Product B 12 setups 6,000 parts 60 inspections Overhead cost per unit c. Product cost per unit using activity-based costing Per Unit Product A Activity Rate Required 2 > Product Cost per Unit < Required 1 Product B Required 2 Show less
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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Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.
The traditional method of overhead allocation is based on a predetermined overhead rate. The predetermined overhead rate can be calculated by dividing total overhead by total direct labor hours. Other than this activity based costing is another method for allocating the overhead to the product.
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