This question is based on Example #2 in the Chapter 4 Example packet. This example uses ABC to cost two different models of TV's. Assume all the data is the same as the problem in the packet, with the exception of the following numbers for the activity allocation base for all the Medium TV's (3000 TV's) produced. # of material handling orders # of machine hours # of packaging hours. 285 15,650 4,825 Assume that the activity based overhead rates do not change from what was calculated in the problem ($300 per material order handled, $14 per machine hour, and $9 per packaging hour) What is the total cost of producing 1 medium TV, including direct materials, direct labor and manufacturing overhead? Hint: remember that the $660,000 for direct materials and $216,000 for direct labor were for all 3000 medium TV's produced. Likewise, the overhead numbers that you will arrive at using the new activity allocation base numbers are for 3000 TV's. So don't forget to divide your final answer by 3000 to arrive at the cost of 1 TV. Round your final answer to the nearest whole number, and don't enter dollar signs.
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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