Zwahlen Corporation has an activity-based costing system with three activity cost pools-Processing, Setting Up, and Othe in the Processing cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the two products and the company's costs and activity-based costing system appear below: Activity Cost Pools Processing Setting Up Other Product D7 Product HØ Total Sales (total) Direct materials (total) Direct labor (total) $56,400 $13,600 $28,800 MHS 8,300 12,300 20,600 1,300 Batches 350 950 Product Product D7 $216,800 НО $302,600 $ 72,900 $145,500 $ 106,430 $ 96,500 Required: a. Calculate activity rates for each activity cost pool using activity-based costing. b. Determine the amount of overhead cost that would be assigned to each product using activity-based costing. c. Determine the product margins for each product 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.
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