Exercise 5-10A (Algo) Computing product cost with given activity allocation rates LO 5-3 Walton Manufacturing produces two keyboards, one for laptop computers and the other for desktop computers. The production process is automated, and the company has found activity-based costing useful in assigning overhead costs to its products. The company has identified five major activities involved in producing the keyboards. Activity Materials receiving & handling Production setup Assembly Quality inspection Packing and shipping Activity measures for the two kinds of keyboards follow: Laptops Desktops Required Labor Cost $1,260 1,150 Material Coat $5,800 7,700 Laptop keyboards Desktop keyboards Allocation Base Cost of material Number of setups Number of parts Inspection time Number of orders Cost Per Unit Number of Number of Setups Parts 50 22 26 15 Allocation Rate 28 of material cost $111.00 per setup $ 3.00 per part $ 2.10 per minute $ 11.00 per order Inspection Time 6,800 minutes 5,500 minutes a. Compute the cost per unit of laptop and desktop keyboards, assuming that Walton made 240 units of each type of keyboard. Note: Round your answers to 2 decimal places. Number of Orders 61 18
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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