Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: Overhead Item Expected Cost Cost Driver Expected Quantity Setup costs $ 59,500 Number of setups 250 Ordering costs 49,000 Number of orders 1,500 Maintenance 138,000 Machine hours 2,000 Power 29,500 Kilowatt hours 4,000 Total Overhead $ 276,000 Total direct labor hours budgeted = 2,000 hours. The following actual data applies to one of the products completed during the year: Product X Direct materials $ 6,900 Number of setups 5 Direct labor $ 4,900 Number of orders 50 Units completed 100 Machine hours 50 Direct labor hours 100 Kilowatt hours 500 If Orange, Inc. uses machine hours to allocate overhead cost, the unit product cost of Product X will be: Multiple Choice $117.00. $137.00 $147.00 $167.00. $187.00.
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.
Orange, Inc. has identified the following cost drivers for its expected
| Overhead Item | Expected Cost | Cost Driver | Expected Quantity | ||||
| Setup costs | $ | 59,500 | Number of setups | 250 | |||
| Ordering costs | 49,000 | Number of orders | 1,500 | ||||
| Maintenance | 138,000 | Machine hours | 2,000 | ||||
| Power | 29,500 | Kilowatt hours | 4,000 | ||||
| Total Overhead | $ | 276,000 | |||||
Total direct labor hours budgeted = 2,000 hours.
The following actual data applies to one of the products completed during the year:
| Product X | |||||||
| Direct materials | $ | 6,900 | Number of setups | 5 | |||
| Direct labor | $ | 4,900 | Number of orders | 50 | |||
| Units completed | 100 | Machine hours | 50 | ||||
| Direct labor hours | 100 | Kilowatt hours | 500 | ||||
If Orange, Inc. uses machine hours to allocate overhead cost, the unit product cost of Product X will be:
-
$117.00.
-
$137.00
-
$147.00
-
$167.00.
-
$187.00.
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