Table 1 Activity Cost Pool Total Cost Total Activity Assembly $ 942,480 66,000 machine-hours Processing orders $ 85,050 1,800 orders Inspection $ 126,854 1,820 inspection-hours Use Table 1 to answer this question. XYZ Corporation has provided the following data from its activity-based costing system (Table 1). The company makes 430 units of product ABA a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product's direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit. According to the activity-based costing system, the average cost of product ABA is closest to: Select one: a. $94.11 per unit. b. $92.49 per unit. c. $65.18 per unit. d. none of the given answer. e. $89.72 per unit.
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.
Table 1
Activity Cost Pool Total Cost Total Activity
Assembly $ 942,480 66,000 machine-hours
Processing orders $ 85,050 1,800 orders
Inspection $ 126,854 1,820 inspection-hours
Use Table 1 to answer this question. XYZ Corporation has provided the following data from its activity-based costing system (Table 1). The company makes 430 units of product ABA a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product's direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit. According to the activity-based costing system, the average cost of product ABA is closest to:
Select one:
a. $94.11 per unit.
b. $92.49 per unit.
c. $65.18 per unit.
d. none of the given answer.
e. $89.72 per unit.
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