Hollins, Inc., a manufacture of computer chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2014. Activity Cost Pools Estimated Overhead Expected use of Cost Drivers per Activity Ordering and receiving Etching Soldering $90,000 480,000 1,760,000 12,000 orders 60,000 machine hours 440,000 labor hours For 2014, the company had 11,000 orders and used 50,000 machine hours, and labor hours totaled 500,000. Required: What is the total overhead applied?
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.
Hollins, Inc., a manufacture of computer chips, employs activity-based costing. The budgeted data for each of the activity cost pools is provided below for the year 2014.
|
Activity Cost Pools |
Estimated |
Expected use of Cost Drivers per Activity |
|
Ordering and receiving Etching Soldering |
$90,000 480,000 1,760,000 |
12,000 orders 60,000 machine hours 440,000 labor hours |
For 2014, the company had 11,000 orders and used 50,000 machine hours, and labor hours totaled 500,000. Required: What is the total overhead applied?
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