Use this information for Miramar Industries to answer the question that follow. Miramar Industries manufactures two products: A and B. The manufacturing operation involves three overhead activities—production setup, materials handling, and general factory activities. Miramar uses activity-based costing to allocate overhead to products. An activity analysis of the overhead revealed the following estimated costs and activity bases for these activities: Activity Cost Activity Base Production setup $250,000 Number of setups Material handling 150,000 Number of parts General overhead 80,000 Number of direct labor hours Each product's total activity in each of the three areas are as follows: Product A Product B Number of setups 100 300 Number of parts 40,000 20,000 Number of direct labor hours 8,000 12,000 What is the overhead allocated to Product B using activity-based costing?
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.
Use this information for Miramar Industries to answer the question that follow.
Miramar Industries manufactures two products: A and B. The manufacturing operation involves three
| Activity | Cost | Activity Base |
| Production setup | $250,000 | Number of setups |
| Material handling | 150,000 | Number of parts |
| General overhead | 80,000 | Number of direct labor hours |
Each product's total activity in each of the three areas are as follows:
| Product A | Product B | |
| Number of setups | 100 | 300 |
| Number of parts | 40,000 | 20,000 |
| Number of direct labor hours | 8,000 | 12,000 |
What is the overhead allocated to Product B using activity-based costing?
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