Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below. Regular Units produced 110,000 Deluxe Total 330,000 Prime costs $8,360,000 $38,280,000 $46,640,000 Machine hours 110,000 550,000 660,000 Engineering hours 300 2,700 3,000 Receiving orders 400 1,200 1,600 Inspection hours 600 1,200 1,800 Overhead costs: Machining $7,260,000 Engineering 1,410,000 Receiving 448,000 Inspecting products 270,000 Required: 1. Calculate the four activity rates. Machining rate per machine hour Engineering rate per hour Receiving rate per order Inspecting rate per hour 2. Calculate the unit costs using activity rates. Round your answers to the nearest cent. Regular Deluxe Unit cost per unit per unit Calculate the overhead cost per unit. Round your answers to the nearest cent. Overhead Cost Regular Deluxe per unit per unit 3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity. Regular Deluxe Cost assignment
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.
![Davis Company produces two hair dryers: regular and deluxe. The company has four activities: machining, engineering, receiving, and inspection. Information on these activities and their drivers is given below.
Units produced
Regular
Deluxe
330,000
Total
110,000
Prime costs
$8,360,000
$38,280,000
$46,640,000
Machine hours
110,000
550,000
660,000
Engineering hours
300
2,700
3,000
Receiving orders
400
1,200
1,600
Inspection hours
600
1,200
1,800
Overhead costs:
Machining
$7,260,000
Engineering
1,410,000
Receiving
448,000
Inspecting products
270,000
Required:
1. Calculate the four activity rates.
Machining rate
Engineering rate
Receiving rate
Inspecting rate
per machine hour
per hour
per order
per hour
2. Calculate the unit costs using activity rates. Round your answers to the nearest cent.
Regular
Deluxe
Unit cost
per unit
per unit
Calculate the overhead cost per unit. Round your answers to the nearest cent.
Overhead Cost
Regular
Deluxe
per unit
per unit
3. If consumption ratios instead of activity rates were used to assign costs instead of activity rates, show the cost assignment for the inspection activity.
Regular
Deluxe
Cost assignment](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F08d7a228-1139-4e6d-ae2a-a710856880a9%2F27bbaee6-f69b-449f-81f4-d2b7c5b3e37e%2F7ixk9jo_processed.png&w=3840&q=75)
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