Hakara Company has been using direct labor costs as the basis for assigning overhead to its many products. Under this allocation system, product A has been assigned overhead of $26.98 per unit, while product B has been assigned $15.22 per unit. Management feels that an ABC system will provide a more accurate allocation of the overhead costs and has collected the following cost pool and cost driver information: Cost Pools Machine setup Materials handling Electric power Activity Costs $ 172,000 162,000 Cost Drivers A Number of units produced 4,000 Direct materials cost Direct labor cost Setup hours Pounds of materials 62,000 Kilowatt-hours 31,000 The following cost information pertains to the production of A and B, just two of Hakara's many products: B 10,000 $ 23,000 $ 38,000 $ 28,000 $37,000 Number of setup hours 100 Pounds of materials used 2,000 Kilowatt-hours 2,000 Activity Driver Consumption 200 2,000 4,000 2,000 18,000 Required: 1. Use activity-based costing to determine a unit cost for each product. (Round your final 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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![Hakara Company has been using direct labor costs as the basis for assigning
overhead to its many products. Under this allocation system, product A has
been assigned overhead of $26.98 per unit, while product B has been assigned
$15.22 per unit. Management feels that an ABC system will provide a more
accurate allocation of the overhead costs and has collected the following cost
pool and cost driver information:
Cost Pools
Machine setup
Materials
handling
Electric power
Activity
Costs
$ 172,000
162,000
A
Number of units produced 4,000
Direct materials cost
Direct labor cost
Cost Drivers
Setup hours
Pounds of
materials
Number of setup hours
100
Pounds of materials used 2,000
Kilowatt-hours
2,000
62,000
Kilowatt-hours
31,000
The following cost information pertains to the production of A and B, just two
of Hakara's many products:
B
10,000
$ 23,000 $ 38,000
$ 28,000 $37,000
Activity Driver
Consumption
200
2,000
4,000
2,000
18,000
Required:
1. Use activity-based costing to determine a unit cost for each product. (Round
your final answers to 2 decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d722e9e-a03b-4b00-b8b9-3e5d6f917bc2%2F0340e9c8-0179-42ac-b57c-db8b778adadb%2Fmbembn_processed.jpeg&w=3840&q=75)
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