H-Technology Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Cost Material handling Material insertion Automated machinery Finishing Units to be Overhead Cost Driver produced Orders to be shipped Number of parts 10 per unit $225,000 Packaging 170,000 $3,880,000 Machine hours per unit Labour hours 12 per unit O $164 O $228 O $141 O $225 2,475,000 840,000 The following information pertains to the three product lines for next year: Economy Standard Deluxe 1 hours Direct 170,000 labour hours Number of parts Number of parts Machine 10,000 5,000 2,000 1,000 500 Orders shipped 15 3 200 25 5 The overhead cost assigned to each unit of Economy under activity-based costing is closest to:
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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