Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below i cost driver information used in the product-costing system: Budgeted Overhead Overhead Cost Pool Cost Driver Estimated Cost Driver Level Machine setups $120,000 # of setups 120 setups Materials handling Quality control 8,700 barrels 1,100 inspections 12,000 machine hours 104,400 # of barrels 264,000 # of inspections Other overhead cost 144,000 # of machine hours Total overhead $632,400 A current product order has the following requirements: Machine setups Materials handling Quality inspections 8 setups 606 barrels 80 inspections Machine hours 830 machine hours Direct labor hour 336 hours Using ABC, how much machine setup overhead is assigned to the 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.
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