Craftmore Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records. Production Activity Indirect Labor Indirect Materials Other Overhead Grinding $ 310,000 Polishing $ 145,000 Product modification 550,000 Providing power $ 260,000 System calibration 560,000 Additional information on the drivers for its production activities follows. Grinding 17,000 machine hours Polishing 17,000 machine hours Product modification 1,500 engineering hours Providing power 15,000 direct labor hours System calibration 200 batches Problem C-1A Part 4 Job 3175 Job 4286 Number of units 150 units 1,875 units Machine hours 350 MH 3,500 MH Engineering hours 30 eng. hours 30 eng. hours Batches 10 batches 30 batches Direct labor hours 520 DLH 4,680 DLH
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.
roblem C-1A Applying activity-based costing LO P1, P2, A1
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[The following information applies to the questions displayed below.]
Craftmore Machining produces machine tools for the construction industry. The following details about
| Production Activity | Indirect Labor | Indirect Materials | Other Overhead | |||||||||
| Grinding | $ | 310,000 | ||||||||||
| Polishing | $ | 145,000 | ||||||||||
| Product modification | 550,000 | |||||||||||
| Providing power | $ | 260,000 | ||||||||||
| System calibration | 560,000 | |||||||||||
Additional information on the drivers for its production activities follows.
| Grinding | 17,000 | machine hours |
| Polishing | 17,000 | machine hours |
| Product modification | 1,500 | engineering hours |
| Providing power | 15,000 | direct labor hours |
| System calibration | 200 | batches |
Problem C-1A Part 4
| Job 3175 | Job 4286 | |||
| Number of units | 150 | units | 1,875 | units |
| Machine hours | 350 | MH | 3,500 | MH |
| Engineering hours | 30 | eng. hours | 30 | eng. hours |
| Batches | 10 | batches | 30 | batches |
| Direct labor hours | 520 | DLH | 4,680 | DLH |
![**Required Information**
**Problem C-1A: Applying Activity-Based Costing LO P1, P2, A1**
[The following information applies to the questions displayed below.]
Craftmore Machining produces machine tools for the construction industry. The following details about overhead costs were taken from its company records.
| Production Activity | Indirect Labor | Indirect Materials | Other Overhead |
|------------------------|----------------|--------------------|----------------|
| Grinding | $310,000 | | |
| Polishing | | $145,000 | |
| Product modification | | | |
| Providing power | $550,000 | | $260,000 |
| System calibration | $560,000 | | |
Additional information on the drivers for its production activities follows.
| Activity | Driver Details |
|------------------------|--------------------------------------|
| Grinding | 17,000 machine hours |
| Polishing | 17,000 machine hours |
| Product modification | 1,500 engineering hours |
| Providing power | 15,000 direct labor hours |
| System calibration | 200 batches |
This information is used to illustrate the application of activity-based costing and how various overhead costs are associated with different production activities and their respective drivers.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F473e532b-e44d-41cf-9bcf-3ab918aca620%2F7c36b6ae-1074-4862-9ee9-a558180a951d%2Fkco3rtp_processed.png&w=3840&q=75)
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