Tent Master produces Pup tents and Pop-up tents. The company budgets $288,000 of overhead cost and 48,000 direct labor hours. Additional information follows. Selling Price Direct Materials Direct Labor $ 84 $ 22 79 23 Budgeted Cost $ 192,000 Per Unit Pup tent Pop-up tent Activity Assembly Electricity 30,000 Materials purchasing 66,000 Total $ 288,000 Activity Cost Driver Pup tents Direct labor hours(DLH) Machine hours (MH) Purchase orders(PO) Required: 1. Compute an activity rate for each activity using activity-based costing. 2. The following actual activity usage produced 10,000 Pup tents and 5,000 Pop-up tents. Allocate overhead cost to Pup tents and to Pop-up tents and compute overhead cost per unit for each product. Activity Usage Pop-up tents 33,000 3,500 $ 47 29 Activity Cost Driver Direct labor hours (DLH) Machine hours (MH) Purchase orders (PO) 150 15,000 6,500 Budgeted Activity Usage 48,000 10,000 500 350 3. Compute product cost per unit for Pup tents and for Pop-up tents. 4. For each product, compute the gross profit per unit (selling price per unit minus the product cost 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.
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