Horgen Corporation manufactures two products: Product M68B and Product H27T. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products M68B and H27T. Activity Cost Pool Activity Measure Total Cost Total Activity Machining Machine-hours $ 299,000 13,000 MHs Machine setups Number of setups $ 240,000 400 setups Product design Number of products $ 80,000 2 products Order size Direct labor-hours $ 290,000 10,000 DLHs Activity Measure Product M68B Product H27T Machine-hours 6,000 7,000 Number of setups 250 150 Number of products 1 1 Direct labor-hours 4,000 6,000 Using the ABC system, how much total manufacturing overhead cost would be assigned to Product H27T?
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.
Horgen Corporation manufactures two products: Product M68B and Product H27T. The company is considering implementing an activity-based costing (ABC) system that allocates its manufacturing
| Activity Cost Pool | Activity Measure | Total Cost | Total Activity | ||
| Machining | Machine-hours | $ | 299,000 | 13,000 | MHs |
| Machine setups | Number of setups | $ | 240,000 | 400 | setups |
| Product design | Number of products | $ | 80,000 | 2 | products |
| Order size | Direct labor-hours | $ | 290,000 | 10,000 | DLHs |
| Activity Measure | Product M68B | Product H27T |
| Machine-hours | 6,000 | 7,000 |
| Number of setups | 250 | 150 |
| Number of products | 1 | 1 |
| Direct labor-hours | 4,000 | 6,000 |
Using the ABC system, how much total
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