Two-Stage ABC for Manufacturing Assume Sherwin-Williams Company, a large paint manufacturer, has determined the following activity cost pools and cost driver levels for the latest period: Activity Cost Pool Activity Cost Machine setup $990,000 Material handling 840,000 Machine operation 200,000 The following data are for the production of single batches of two products, Mirlite and Subdue: Mirlite Gallons produced Direct labor hours Machine hours Direct labor cost $12,300 $9,500 Direct materials cost $240,000 $110,000 Setup hours Material moves $ Subdue $ per gallon Activity Cost Driver 3,000 setup hours 6,000 material moves 25,000 machine hours 30,000 300 650 Determine the batch and unit costs per gallon of Mirlite and Subdue using ABC. (Round your answers to the nearest cent.) Mirlite per gallon 12 40 Subdue 20,000 150 200 10 25
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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