Quantity of Cost Drivers Used by Each Project Overhead Costs in 2017 Cost Driver Design department hours Number of engineering hours Chandler Department Design Engineering Construction Manley 8,000 4,500 26,000 Henry 10,000 $3,000,000 1,000,000 4,100,000 $8,100,000 2,000 4,000 4,000 Labor-hours 29,000 27,000 1. Compute the overhead allocated to each project in 2017 using the simple costing system that allocates overhead costs to jobs based on the number of jobs. 2. Compute the overhead allocated to each project in 2017 using department overhead cost rates. 3. Do you think Chandler had a valid reason for dissatisfaction with the cost and price of its building? How does the allocation based on department rates change costs for each project? 4. What value, if any, would DLN get by allocating costs of each department based on the activities done in that department? Required
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.
Department costing, service company. DLN is an architectural rm that designs and builds buildings. It prices each job on a cost plus 20% basis.
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