Sabby Industries has three activity cost pools and two products. It expects to produce 2,900 units of Product S209 and 1.200 of Product NZ16. Having identified its activity cost pools and the cost drivers for each pool, Sabby accumulated the following data relative to those activity cost pools and cost drivers. Activity Cost Pool Machine set-ups Assembling Inspection (a) Calculate the overhead rates. Cost Driver Set-ups Machine hours Inspections Machine set-ups $ Assembling Inspection $ Estimated Overhead $78,660 323,000 6,400 Estimated Use of Cost Drivers per set-up 190 17,000 per inspection 100 per machine hour 5209 130 10,100 60 NZ16 60 6,900 40
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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