Stackhouse Computing produces high performance desktop computers. Labor cost data shows that the company spent $1,036,000 for 3,700 computers produced, and each computer requires 2 technician hours and 5 hours of direct labor. Direct labor is paid $16 per hour by the company. What is the cost of 1 technician hour?
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.
Stackhouse Computing produces high performance desktop computers. Labor cost data shows that the company spent $1,036,000 for 3,700 computers produced, and each computer requires 2 technician hours and 5 hours of direct labor. Direct labor is paid $16 per hour by the company. What is the cost of 1 technician hour?
In the given case, the cost of 1 technician hour can be calculated by dividing the total cost of technician per computer by dividing technician hour required per computer. The total cost of a technician will be calculated by subtracting the direct labor cost per computer from the total labor cost per computer.
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