Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars. Round rate to four decimal places, if applicable.
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.
Activity-Based Costing and Conventional Costs Compared
Hickory Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the
| Gas Cooker | Charcoal Smoker | |
|---|---|---|
| Units | 1,000 | 5,000 |
| Number of batches | 50 | 10 |
| Number of batch moves | 80 | 20 |
| Direct materials | $90,000 | $150,000 |
| Direct labor | $20,000 | $25,000 |
Manufacturing
|
Activity |
Cost |
Cost Driver |
|---|---|---|
| Materials acquisition and inspection | $80,800 |
Amount of direct materials cost |
| Materials movement | 16,200 |
Number of batch moves |
| Scheduling | 36,000 |
Number of batches |
| $133,000 |
a. Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.
Round rate to four decimal places, if applicable.
Manufacturing overhead based on direct labor dollars: $Answer per direct labor dollar
Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.
| Product Costs per Unit | ||
|---|---|---|
|
Gas Cooker |
Charcoal Smoker |
|
| Direct materials | Answer | Answer |
| Direct labor | Answer | Answer |
| Manufacturing overhead: | Answer | Answer |
| Total cost | Answer | Answer |
| Units | Answer | Answer |
| Cost per unit | Answer | Answer |
b. Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.
Round answers to two decimal place, if needed.
Activity-based overhead rates:
Materials acquisition and handling $Answer per direct material dollar
Materials movement $Answer per move
Scheduling $Answer per batch
Use rounded overhead rate calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round cost per unit to two decimal places, if needed.
| Product Costs per Unit | ||
|---|---|---|
|
Gas Cooker |
Charcoal Smoker |
|
| Direct materials | Answer | Answer |
| Direct labor | Answer | Answer |
| Manufacturing overhead: | ||
| Materials acquisition | Answer | Answer |
| Materials movement | Answer | Answer |
| Scheduling | Answer | Answer |
| Total cost per batch | Answer | Answer |
| Number of units per batch | Answer | Answer |
| Cost per unit | Answer | Answer |
a.
Manufacturing overhead applied to Gas cooker = $133,000* $20,000/ $45,000 = $59,111.1111
Manufacturing overhead applied to Charcoal Smoker = $133,000* $25000/ $45,000 = $73,889.8889
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