Juneau Company manufactures a variety of products in a single facility. Consultants hired by the companyto do an activity-based costing analysis have identified the following activities carried out in the companyon a routine basis:a. Machines are set up between batches of different products.b. The company’s grounds crew maintains planted areas surrounding the factory.c. A percentage of all completed goods are inspected on a random basis.d. Milling machines are used to make components for products.e. Employees are trained in general procedures.f. Purchase orders are issued for materials required in production.g. The maintenance crew does routine periodic maintenance on general-purpose equipment.h. The plant controller prepares periodic accounting reports.i. Material is received on the receiving dock and moved to the production area.j. The engineering department makes modifications in the designs of products.k. The human resources department screens and hires new employees.l. Production orders are issued for jobs.Required:1. Classify each of the above activities as a unit-level, batch-level, product-level, or facility-level activity.2. For each of the above activities, suggest an activity measure that could be used to allocate its costs toproducts
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.
Juneau Company manufactures a variety of products in a single facility. Consultants hired by the company
to do an activity-based costing analysis have identified the following activities carried out in the company
on a routine basis:
a. Machines are set up between batches of different products.
b. The company’s grounds crew maintains planted areas surrounding the factory.
c. A percentage of all completed goods are inspected on a random basis.
d. Milling machines are used to make components for products.
e. Employees are trained in general procedures.
f. Purchase orders are issued for materials required in production.
g. The maintenance crew does routine periodic maintenance on general-purpose equipment.
h. The plant controller prepares periodic accounting reports.
i. Material is received on the receiving dock and moved to the production area.
j. The engineering department makes modifications in the designs of products.
k. The human resources department screens and hires new employees.
l. Production orders are issued for jobs.
Required:
1. Classify each of the above activities as a unit-level, batch-level, product-level, or facility-level activity.
2. For each of the above activities, suggest an activity measure that could be used to allocate its costs to
products
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