EcoFabrics has budgeted overhead costs of $1,020,600. It has allocated overhead on a plantwide basis to its two products (wos cotton) using direct labor hours which are estimated to be 486,000 for the current year. The company has decided to experime activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are cutting driver is machine hours) and design (cost driver is number of setups). Overhead allocated to the cutting cost pool is $388,800 a $631,800 is allocated to the design cost pool. Additional information related to these pools is as follows. Machine hours Number of setups (a1) Cutting Design Wool $ $ Cotton 1,080 Overhead rates for activity-based costing 108,000 108,000 216,000 Calculate the overhead rate using activity based costing. (Round answers to 2 decimal places, e.g. 12.25.) 540 Total 1,620 per machine hour per setup
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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