Tesh, Inc., manufactures and sells two products: Product P9 and Product I9. Data concerning the expected production of each product and the expected total direct labour-hours (DLHs) required to produce that output appear below: Expected Production Direct Labour-Hours Per Unit Total Direct Labour-Hours Product P9 200 7.0 1,400 Product I9 400 6.0 2,400 Total direct labour-hours 3,800 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product P9 Product I9 Labour-related DLHs $71,136 1,400 2,400 Machine setups setups 42,880 300 200 General factory MHs 406,620 4,200 3,900 $520,636 The activity rate for the Machine setups activity cost pool under activity-based costing is closest to: a. $1,041.27 per setup b. $85.76 per setup c. $214.40 per setup d. $142.93 per setup
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.
Tesh, Inc., manufactures and sells two products: Product P9 and Product I9. Data concerning the expected production of each product and the expected total direct labour-hours (DLHs) required to produce that output appear below:
| Expected Production | Direct Labour-Hours Per Unit | Total Direct Labour-Hours | |
| Product P9 | 200 | 7.0 | 1,400 |
| Product I9 | 400 | 6.0 | 2,400 |
| Total direct labour-hours | 3,800 |
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
| Estimated | Expected Activity | |||
| Activity Cost Pools | Activity Measures | Overhead Cost | Product P9 | Product I9 |
| Labour-related | DLHs | $71,136 | 1,400 | 2,400 |
| Machine setups | setups | 42,880 | 300 | 200 |
| General factory | MHs | 406,620 | 4,200 | 3,900 |
| $520,636 |
The activity rate for the Machine setups activity cost pool under activity-based costing is closest to:
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