1.
Cost driver:
Cost driver is a method of costing to assign the
Activity Based Costing:
Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.
Cost driver for each overhead and to calculate the manufacturing overhead cost per unit for each product.
Given information:
Machine hours for product M is 25,000 hours
Machine hours for product F is 50,000 hours
Total machining cost is $375,000.
Total machine hours are 75,000 hours.
Production runs for product M is 50.
Production runs for product F is 50.
Total setup costs are $120,000.
Inspection hours for product M are 1,000 hours.
Inspection hours for product F are 500 hours.
Total inspection cost is $105,000.
2.
To calculate: The
Given information:
Direct cost per unit of product M is $4 per unit.
Overhead cost per unit of product is $5.10 per unit.
Direct cost per unit of product F is $4 per unit.
Overhead cost per unit of product is $3.17 per unit.
Direct material cost of product M is $150,000.
Direct manufacturing labor cost of product M is $50,000.
Direct material cost of product F is $300,000.
Direct manufacturing labor cost of product F is $100,000.
Total direct cost of product F is $400,000
Annual production of product F is 100,000 units
3.
To define: The use of new cost information from its activity based costing system to manage its business.
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