Part 2: The Frankenstein Company does brain surgery and oil changes. Information about the company is as follows: Direct materials REQUIRED: Direct labor oil change Brain surgery Expected overhead oil change Brain surgery Expected production 2024 oil changes brain surgeries $910,000 $25 $200 1 hour at $30 per hour 2 hours at $10 per hour Frankenstein Company has hired a new CEO and she want to impliment ABC (Activity Based Costing) she has uncovered the following overhead rent on facilty transfusion machine indirect labor USING ABC DETERMINE THE COST OF A) OIL CHANGE B) BRAIN SURGERY 10000 20000 $400,000 allocated using labor hours $300,000 needed 1 hour for oil change and 1 hour for brain surgery $210,000 based on direct labor dollars.
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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