Lowry Music manufacturers music books. They use an ABC costing system. The relevant cost information is provided below: Activity Cost Driver Estimated cost pool Estimated cost driver Printing DL hours $310,000 20,000 DL hours Finishing machine hours $260,000 13,000 machine hours Movement # moves $80,000 10 movements Total The actual cost driver information is as follows:
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.
Lowry Music manufacturers music books. They use an ABC costing system. The relevant cost information is provided below:
| Activity | Cost Driver | Estimated cost pool | Estimated cost driver |
| Printing | DL hours | $310,000 | 20,000 DL hours |
| Finishing | machine hours | $260,000 | 13,000 machine hours |
| Movement | # moves | $80,000 | 10 movements |
| Total |
The actual cost driver information is as follows:
- 21,000 machine hours
- 12,500 DL hours
- 5 moves
Calculate the total applied
incorrect answer: 615500
The overhead rate is a per-unit cost applied to production to allocate indirect costs, helping determine the total cost of a product or service.
It ensures that indirect expenses, like utilities and maintenance, are distributed across all produced items.
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