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. Activity Cost Activity Base Procurement $380,600 Number of purchase orders Scheduling $214,800 Number of production orders Materials handling $410,700 Number of moves Product development $746,600 Number of engineering changes Production $1,500,700 Machine hours Number of Purchase Orders Number of Production Orders Number of Moves Number of Engineering Changes Machine Hours Number of Units Disk drives 3,820 270 1,210 15 1,700 2,100 Tape drives 2,500 195 650 5 9,100 4,000 Wire drives 12,300 990 3,500 28 10,100 2,200 Determine the activity-based cost for each tape drive unit. a.$269.53 b.$20.44 c.$215.21 d.$830.19
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.
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.
Activity Cost |
Activity Base |
||||||||||||||||||
| Procurement | $380,600 | Number of purchase orders | |||||||||||||||||
| Scheduling | $214,800 | Number of production orders | |||||||||||||||||
| Materials handling | $410,700 | Number of moves | |||||||||||||||||
| Product development | $746,600 | Number of engineering changes | |||||||||||||||||
| Production | $1,500,700 | Machine hours | |||||||||||||||||
Number of Purchase Orders |
Number of Production Orders |
Number of Moves |
Number of Engineering Changes |
Machine Hours |
Number of Units |
||||||||||||||
| Disk drives | 3,820 | 270 | 1,210 | 15 | 1,700 | 2,100 | |||||||||||||
| Tape drives | 2,500 | 195 | 650 | 5 | 9,100 | 4,000 | |||||||||||||
| Wire drives | 12,300 | 990 | 3,500 | 28 | 10,100 | 2,200 |
Determine the activity-based cost for each tape drive unit.
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