Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities: Alpha Zeta Units produced 250 20,000 Batch size (units) 10 500 Total direct labor hours 1,000 39,000 Cost per setup $2,000 $2,000 Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent): Alpha Zeta A) $200.00 $4.00 B) $500.00 $1,025.64 C) $6.42 $6.50 D) $80.00 $50.00 E) $8.00 $0.10
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.
Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities:
|
|
Alpha |
Zeta |
|
Units produced |
250 |
20,000 |
|
Batch size (units) |
10 |
500 |
|
Total direct labor hours |
1,000 |
39,000 |
|
Cost per setup |
$2,000 |
$2,000 |
Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent):
|
|
Alpha |
Zeta |
|
A) |
$200.00 |
$4.00 |
|
B) |
$500.00 |
$1,025.64 |
|
C) |
$6.42 |
$6.50 |
|
D) |
$80.00 |
$50.00 |
|
E) |
$8.00 |
$0.10 |
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