Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Procurement Scheduling Materials handling Product development Production Activity Cost $390,900 200,200 479,700 Number of moves 770,600 Number of engineering changes 1,491,500 Machine hours Disk drives Tape drives Wire drives Number of Purchase Orders Number of Number Production of Orders Moves 1,400 250 155 520 820 4,500 The activity rate for the procurement activity cost pool is Oa. $20.40 per purchase order Ob. $65.70 per purchase order Oc. $319.10 per purchase order Od. $163.43 per purchase order Activity Base Number of purchase orders Number of production orders 4,160 2,100 12,900 Number of Engineering Changes 14 4 23 Machine Hours 1,700 9,800 11,200 Number of Units 1,800 4,400 2,300
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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