Glassworks Inc. produces two types of glass shelving, rounded edge and squared edge, on the same production line. For the current period, the company reports the following data. Total Direct materials Rounded Edge $ 9,500 6,200 Squared Edge $21,800 11,800 35,400 Direct labor $ 31,300 18,000 54,000 Overhead (300% of direct labor cost) 18,600 Total cost $103,300 $ 34,300 10,700 ft. $ 3.21 $ 69,000 14,200 ft. Quantity produced Average cost per ft. (rounded) $ 4.86 Glassworks's controller wishes to apply activity-based costing (ABC) to allocate the $54,000 of overhead costs incurred by the two product lines to see whether cost per foot would change markedly from that reported above. She has collected the following nformation. Cost Overhead Cost Category (Activity Cost Pool) Supervision $ 2,160 Depreciation of machinery Assembly line preparation Total overhead 28,840 23,000 $54,000 he has also collected the following information about the cost drivers for each category (cost pool) and the amount of each driver sed by the two product lines. (Round activity rate and cost per unit answers to 2 decimal places.)
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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