Lampierre makes brass and gold frames. The company computed this information to decide whether to switch from the traditional allocation method to ABC: Brass Gold Units Planed 800 100 Material Moves 500 125 Machine Setups 300 450 Direct Labor Hours 600 1,100
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.
Lampierre makes brass and gold frames. The company computed this information to decide whether to switch from the traditional allocation method to ABC:
| Brass | Gold | ||
| Units Planed | 800 | 100 | |
| Material Moves | 500 | 125 | |
| Machine Setups | 300 | 450 | |
| Direct Labor Hours | 600 | 1,100 |
The estimated overhead for the material cost pool is estimated as $18,125, and the estimate for the machine setup pool is $25,500.
A. Calculate the allocation rate per unit of brass and per unit of gold using the traditional method? Round intermediate calculations and final answers to two decimal places.
| Allocation Rate per Unit |
|
| Brass | $fill in the blank 1 |
| Gold | $fill in the blank 2 |
B. Calculate the allocation rate per unit of brass and per unit of gold using the activity-based costing method? Round intermediate calculations and final answers to two decimal places.
| Allocation Rate per Unit |
|
| Brass | $fill in the blank 3 |
| Gold | $fill in the blank 4 |
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