DLN is an architectural firm that designs and builds build- ings. It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $8,100,000. DLN's simple cost- ing system allocates overhead costs to its jobs based on number of jobs. There were three jobs in 2017. One customer, Chandler, has complained that the cost and price of its building in Chicago was not competitive. As a result, the controller has initiated a detailed review of the overhead allocation to determine if overhead costs should be charged to jobs in proportion to consumption of overhead resources by jobs. She gathers the following information: Quantity of Cost Drivers Used by Each Project Overhead Manley 8,000 4,500 26,000 Department Design Engineering Construction Cost Driver Costs in 2017 Chandler Нeпry Design department hours Number of engineering hours $3,000,000 1,000,000 4,100,000 $8,100,000 2,000 4,000 29,000 10,000 4,000 27,000 Labor-hours
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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