Driver Corp. is considering the use of activity-based costing. The following information is provided for the production of two product lines: (Click the icon to view the information.) Driver plans to produce 250 units of Product A and 200 units of Product B. Compute the ABC indirect manufacturing cost per unit for each product. (Round your answers to the nearest cent.) Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Data table Activity Setup Machine maintenance Total indirect manufacturing costs Direct labor hours Number of setups Number of machine hours $ $ C Cost 166,000 106,000 Number of setups 60,000 Number of machine hours Product A 5,000 30 960 Allocation Base Predetermined OH = allocation rate Product B 7,000 170 3,040 Total 12,000 200 4,000 - X
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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ABC costing, or activity-based costing, is a cost accounting method that allocates indirect costs to products or services based on the activities required to produce them. ABC costing recognizes that some activities consume more resources than others, and therefore, have a greater impact on the cost of the final product or service.
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