Roll Board Inc. manufactures several models of high-quality skateboards. The company's ABC system has four activity cost pools. which are listed below along with their activity measures and activity rates: Activity Cost Pool Supporting direct labour Batch processing Order processing Customer service The company just completed a single order from SkateCo for 1750 entry-level skateboards. The order was produced in 32 batches. Each skateboard required 0.4 direct labour-hours. The selling price was $135 per skateboard, the direct materials cost was $68.30 per skateboard, and the direct labour cost was $18.50 per direct labour-hour. This was the only order from SkateCo for the year. Sales Costs Activity Measure Number of direct labour-hours Number of batches Number of orders Number of customers Required: Prepare a report showing the customer margin on sales to SkateCo for the year Direct materials Direct labour Activity Rate $2 per direct labour-hour 598 per batch $81 per order $32 per customer Supporting direct labour Batch processing Order processing Customer service overhead Customer margin
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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