Stage 2 ABC for Manufacturing: Reassigning Costs to Cost Objectives Regal Products has developed the following activity cost information for its manufacturing activities: Activity Activity cost Machine setup $60.00 per batch 15.00 per batch move 0.10 per pound Drilling 5.00 per hole Welding 2.00 per inch Shaping 25.00 per hour Assembly 19.00 per hour Inspection 2.00 per unit Filling an order for a batch of 50 fireplace inserts (each insert weighing 150 pounds) required the following: . Three batch moves Two sets of inspections Drilling five holes in each unit • Completing 50 inches of welds on each unit Movement . Thirty minutes of shaping for each unit • One hour of assembly per unit ● Determine the activity cost of converting the raw materials into 50 fireplace inserts. $Answer
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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