Health R Us, Inc. uses a traditional product casting system to assign overhead costs uniformly to all its packaged multigrain products To meet Food and Drug Administration requirements and to assure its customers of safe, sanitary and nutritious food, Health R Us engages in a high level of quality control Health R Us assigns its quality control overhead costs to all products at a rate of 17% of direct labor costs. Its direct labor cost for the month of June for its low-calorie breakfast line is $70.000. In response to repeated requests from its financial vice president, Health R Us's management agrees to adopt activity-based costing Data relating to the low calorie breakfast line for the month of June are as follows. Activity Cost Pools Inspections of material received in-process inspections FDA certification Cost Drivers Number of pounds Number of servings Customer onders Overhead Rate $0.90 per pound $0.33 per serving $12.00 per order Number of Cost Drivers Used per Activity 5.500 pounds 9.600 servings 470 orders
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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