The following information is provided for the production of two product lines named as pen and pencil of a Deep corporation. Activity Cost (OMR) Setup 250,000 Machine maintenance 75,000 Total indirect manufacturing costs 325,000 Product- pen Product- pencil Total( OMR) Direct labor hours 7000 3000 10,000 Number of setups 70 30 100 Number of machine hours 1,200 3,800 5,000 The Deep Corporation plans to produce 500 units of pens and 1000 units of pencils. Compute the activity based cost per unit of each product.
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.
(B) The following information is provided for the production of two product lines named as pen and pencil of a Deep corporation.
|
Activity |
Cost (OMR) |
|
Setup |
250,000 |
|
Machine maintenance |
75,000 |
|
Total indirect |
325,000 |
|
|
Product- pen |
Product- pencil |
Total( OMR) |
|
Direct labor hours |
7000 |
3000 |
10,000 |
|
Number of setups |
70 |
30 |
100 |
|
Number of machine hours |
1,200 |
3,800 |
5,000 |
The Deep Corporation plans to produce 500 units of pens and 1000 units of pencils. Compute the activity based cost per unit of each product.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
