Using the following Data for this requirement: Note: Use the provided Assumed Overhead rates. Do not use the rates computed in questions 33-36. One particular batch of 50 luxury handbags had the following specifications: Batch Activity Assumed Overhead Rate 10 Direct labor hours $18 per hour 5 Purchase orders 5 per order 3 Shipments received 3 per shipment 2 Setups 50 per setup 13 Inspections 6 per inspection Calculate the overhead to be allocated to the handbags under the activity-based costing method for the Purchasing Activity. $25 $30 $20 $50
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.
QUESTION 37
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Using the following Data for this requirement: Note: Use the provided Assumed
Overhead rates. Do not use the rates computed in questions 33-36.One particular batch of 50 luxury handbags had the following specifications:
Batch Activity
Assumed Overhead Rate
10 Direct labor hours
$18 per hour
5 Purchase orders
5 per order
3 Shipments received
3 per shipment
2 Setups
50 per setup
13 Inspections
6 per inspection
Calculate the overhead to be allocated to the handbags under the activity-based costing method for the Purchasing Activity.
$25
$30
$20
$50
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