So Hum has two product lines: hand poured candles and DIY candle kits. The company assigns $100,000 in manufacturing overhead costs to three cost pools: inspections, set up and materials handling. $30,000 has been assigned to inspections, $55,000 to set up and $15,000 to materials handling. Additional information about each product line is below: DIY candle kit Hand poured candle %$4 24 %24 24 190,000 96,000 15,000 6,000 Sales revenue Direct labor and materials costs 325,000 225,000 Units produced and sold Machine set ups Square feet of production space Material orders received Quality control inspection hours a. Using activity cost pools, compute the product cost per unit of hand poured candles. 55,000 16,000 1,500 225 500 75 1,750 250 b. Assume the company uses only machine set ups to allocate overhead costs (job costing). Compute the product cost per unit of the hand poured candles. a. Unit product cost b. Unit product cost
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.
Step by step
Solved in 4 steps
