DynaMore is a video console manufacturer. Information about the company’s two products follows: (picture1) The company incurs $885,800 in overhead per year and has traditionally applied overhead on the basis of direct labor hours. Each unit of product requires one testing. Required A.How much overhead will be allocated to each product using the traditional direct labor hours allocation base? What overhead cost per unit will be allocated to each product? B.Assume that DynaMore has identified three activity cost pools. （picture2） Given these activity pools and cost drivers, determine the activity rates. C.How much overhead should be allocated to each TD-1000 under activity-based costing?
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.
DynaMore is a video console manufacturer. Information about the company’s two products follows:
(picture1)
The company incurs $885,800 in
Required
A.How much overhead will be allocated to each product using the traditional direct labor hours allocation base? What overhead cost per unit will be allocated to each product?
B.Assume that DynaMore has identified three activity cost pools.
（picture2）
Given these activity pools and cost drivers, determine the activity rates.
C.How much overhead should be allocated to each TD-1000 under activity-based costing?
D.Explain the difference in overhead costs per console under traditional costing and activity-based costing.
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