Hello, MedTech Inc. manufactures and sells diagnostic equipment used in the medical profession. Its job costing system was designed using an activity-based costing approach. Direct materials and direct labor costs are accumulated separately, along with information concerning four manufacturing overhead cost drivers (activities). Assume that the direct labor rate is $19 per hour and that there were no beginning inventories. The following information was available for 2016, based on an expected production level of 273,684 units for the year. Activity cost driver Budgeted costs for 2016 Cost driver used as allocation base Cost allocation rate Materials handling $5,500,000 Number of parts used $3.25 per part Milling and Grinding $8,600,000 Number of machine hours 12.00 per hour Assembly and inspection 5,000,000 Dired labor hours worked 5.25 per hour Testing 1,300,000 Number of units tested 4.75 per unit The following production, costs, and activities occurred during the month of August. Units produced/tested Direct materials costs Number of parts used Machine hours Direct labor hours 59,000 $3,500,000 275,000 92,000 170,000 Question 5a: Calculate the total manufacturing costs and the cost per unit produced and tested during the month of August for MedTech Inc. (Round "Cost per unit" to 2 decimal places). Total Manufacturing cost? Cost per unit produced and tested:? Thanks.
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.
Hello,
MedTech Inc. manufactures and sells diagnostic equipment used in the medical profession. Its
| Activity cost driver | Budgeted costs for 2016 | Cost driver used as allocation base | Cost allocation rate |
| Materials handling | $5,500,000 | Number of parts used | $3.25 per part |
| Milling and Grinding | $8,600,000 | Number of machine hours | 12.00 per hour |
| Assembly and inspection | 5,000,000 | Dired labor hours worked | 5.25 per hour |
| Testing | 1,300,000 | Number of units tested | 4.75 per unit |
The following production, costs, and activities occurred during the month of August.
| Units produced/tested | Direct materials costs | Number of parts used | Machine hours | Direct labor hours |
| 59,000 |
$3,500,000 |
275,000 | 92,000 | 170,000 |
Question 5a: Calculate the total
Total Manufacturing cost?
Cost per unit produced and tested:?
Thanks.
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