During the week of June 12, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 units of Model B. The following costs were incurred: Materials Salaries/ Wages Machining Other Total Cost Order
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.
During the week of June 12, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 units of Model B. The following costs were incurred:
| Materials | Salaries/ Wages |
Machining | Other | Total Cost | |||||
| Order processing | $18,000 | $18,000 | |||||||
| Production planning | 36,000 | 36,000 | |||||||
| Purchasing | 27,000 | 27,000 | |||||||
| Stamping | $375,000 | 37,500 | $36,000 | $18,000 | 466,500 | ||||
| Welding | 150,000 | 42,000 | 42,000 | 12,000 | 246,000 | ||||
| Cladding | 75,000 | 75,000 | |||||||
| Testing | 10,500 | 10,500 | |||||||
| Packaging and shipping | 9,000 | 9,000 | |||||||
| Invoicing | 12,000 | 12,000 | |||||||
| Total | $600,000 | $192,000 | $78,000 | $30,000 | $900,000 |
Required:
1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost.
$fill in the blank 1 per unit
2. Calculate the unit cost for Models A and B.
| Unit Cost | |
| Model A | $fill in the blank 2 |
| Model B | $fill in the blank 3 |
3. What if Model A is responsible for 40 percent of the materials cost? Calculate the unit materials cost for Models A and B.
| Unit Cost | |
| Model A | $fill in the blank 4 |
| Model B | $fill in the blank 5 |
Calculate the total unit cost for Models A and B.
| Unit Cost | |
| Model A | $fill in the blank 6 |
| Model B | $fill in the blank 7 |
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