Snavely, Incorporated, manufactures and sells two products: Product E1 and Product A7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Product E1 Product A7 Product E1 $ 228.00 Product A7 $ 300.00 Expected Production Direct Labor-Hours Per Unit Total Direct Labor-Hours 1,200 4.0 4,800 200 400 Total direct labor-hours 5,200 The direct labor rate is $26.20 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit 2.0 The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Product E1 Labor-related Machine setups Order size Activity Cost Pools Activity Measures Estimated Overhead Cost Expected Activity Product A7 Total $ 127,800 60,270 942,670 $ 1,130,740 The activity rate for the Order Size activity cost pool under activity-based costing is closest to: Multiple Choice $319.50 per MH $127.39 per MH $72.33 per MH $217.45 per MH DLHS setups MHS 4,800 1,300 3,900 400 5,200 200 1,500 3,500 7,400
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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