Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Labor-related $ 7.00 per direct labor-hour Machine-related $ 3.00 per machine-hour Machine setups $ 40.00 per setup Production orders $ 160.00 per order Shipments $ 120.00 per shipment General factory $ 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: J78 B52 Direct materials cost per unit $ 6.50 $ 31.00 Direct labor cost per unit $ 3.75 $ 6.00 Number of units produced per year 4,000 100 Total Expected Activity J78 B52 Direct labor-hours 1,000 40 Machine-hours 3,200 30 Machine setups 5 1 Production orders 5 1 Shipments 10 1 Required: Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Exercise 4-3 Compute ABC Product Costs [LO4-3] Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Cost Pool Activity Rates Labor-related $ 7.00 per direct labor-hour Machine-related $ 3.00 per machine-hour Machine setups $ 40.00 per setup Production orders $ 160.00 per order Shipments $ 120.00 per shipment General factory $ 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: J78 B52 Direct materials cost per unit $ 6.50 $ 31.00 Direct labor cost per unit $ 3.75 $ 6.00 Number of units produced per year 4,000 100 Total Expected Activity J78 B52 Direct labor-hours 1,000 40 Machine-hours 3,200 30 Machine setups 5 1 Production orders 5 1 Shipments 10 1 Required: Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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.
Exercise 4-3 Compute ABC Product Costs [LO4-3]
| Activity Cost Pool | Activity Rates | ||
| Labor-related | $ | 7.00 | per direct labor-hour |
| Machine-related | $ | 3.00 | per machine-hour |
| Machine setups | $ | 40.00 | per setup |
| Production orders | $ | 160.00 | per order |
| Shipments | $ | 120.00 | per shipment |
| General factory | $ | 4.00 | per direct labor-hour |
Cost and activity data have been supplied for the following products:
| J78 | B52 | ||||||
| Direct materials cost per unit | $ | 6.50 | $ | 31.00 | |||
| Direct labor cost per unit | $ | 3.75 | $ | 6.00 | |||
| Number of units produced per year | 4,000 | 100 | |||||
| Total Expected Activity |
||||||
| J78 | B52 | |||||
| Direct labor-hours | 1,000 | 40 | ||||
| Machine-hours | 3,200 | 30 | ||||
| Machine setups | 5 | 1 | ||||
| Production orders | 5 | 1 | ||||
| Shipments | 10 | 1 | ||||
Required:
Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Exercise 4-3 Compute ABC Product Costs [LO4-3]
| Activity Cost Pool | Activity Rates | ||
| Labor-related | $ | 7.00 | per direct labor-hour |
| Machine-related | $ | 3.00 | per machine-hour |
| Machine setups | $ | 40.00 | per setup |
| Production orders | $ | 160.00 | per order |
| Shipments | $ | 120.00 | per shipment |
| General factory | $ | 4.00 | per direct labor-hour |
Cost and activity data have been supplied for the following products:
| J78 | B52 | ||||||
| Direct materials cost per unit | $ | 6.50 | $ | 31.00 | |||
| Direct labor cost per unit | $ | 3.75 | $ | 6.00 | |||
| Number of units produced per year | 4,000 | 100 | |||||
| Total Expected Activity |
||||||
| J78 | B52 | |||||
| Direct labor-hours | 1,000 | 40 | ||||
| Machine-hours | 3,200 | 30 | ||||
| Machine setups | 5 | 1 | ||||
| Production orders | 5 | 1 | ||||
| Shipments | 10 | 1 | ||||
Required:
Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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