The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 150,000 to 250,000 technician hours per year: Fixed costs per year $8,600,000 Variable costs $75 per technician hour Budgeted long−run usage in hours per year: Large Plane Department 90,000 technician hours Small Plane Department 160,000 technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 90,000 technician hours. If a dual−rate cost−allocation method is used, what amount of materials laboratory costs will be budgeted for the Large Plane Department? A. $7,658,000 B. $9,012,500 C. $11,587,500 D. $9,846,000
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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Budgeted costs of operating the materials laboratory for 150,000 to 250,000 technician hours per year:
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Fixed costs per year
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$8,600,000
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Variable costs
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$75
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per technician hour
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Budgeted
long−run
usage in hours per year: |
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Large Plane Department
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90,000
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technician hours
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Small Plane Department
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160,000
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technician hours
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