Nautical Creations manufactures high-end boat accessories for large custom yachts. Nautical has always applied manufacturing overhead using a traditional predetermined overhead rate based on direct labor hours, this year it is $45 per DLH. Nautical is currently evaluating the use of activity-based driver rates to apply the variety of its manufacturing overhead cost items and has assembled the following overhead activity drivers, budgeted amounts, and actual activity required to produce Job number 258. Overhead Activity Driver Budgeted Cost Budgeted Activity Machining time $ 200,000 5,000 hours Direct labor time $ 220,000 10,000 hours Quality inspection time $30,000 2,000 hours Using the traditional method of applying manufacturing overhead, the amount of overhead applied to Job number 258 would be: Multiple Choice A) $44,600. B) $36,000. C) $72,000. Incorrect D) $63,000. Activity used on Job number 258 600 hours 800 hours 200 hours
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.
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