Independence Co. budgeted $576,760 manufacturing direct wages, 2,554 direct labor hours and had the following manufacturing overhead: Overhead Budgeted Budgeted Level Overhead Cost Pool Overhead Cost for Cost Driver Cost Driver Materials handling $171,000 3,750 pounds Weight of materials Machine setup $14,918 426 setups Number of setups Machine repair $1,577 35,000 machine hours Machine hours Inspections $11,590 171 inspections Number of inspections Requirements for Job #971 which manufactured 4 units of product: Direct labor 23 hours Direct materials 140 pounds Machine setup 34 setups Machine hours 16,100 machine hours Inspections 17 inspections Using ABC, the per unit (total) overhead cost assigned to Job #971 is: $6,068.82 $1,703.30 $4,004.51 $2,363.07 $7,390.11
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.
Accounting
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Independence Co. budgeted $576,760 manufacturing direct wages, 2,554 direct labor hours and had the following manufacturing
overhead :Overhead Budgeted Budgeted Level Overhead
Cost Pool Overhead Cost for Cost Driver Cost Driver
Materials handling $171,000 3,750 pounds Weight of materials
Machine setup $14,918 426 setups Number of setups
Machine repair $1,577 35,000 machine hours Machine hours
Inspections $11,590 171 inspections Number of inspections
Requirements for Job #971 which manufactured 4 units of product:
Direct labor 23 hours
Direct materials 140 pounds
Machine setup 34 setups
Machine hours 16,100 machine hours
Inspections 17 inspections
Using ABC, the per unit (total) overhead cost assigned to Job #971 is:
$6,068.82
$1,703.30
$4,004.51
$2,363.07
$7,390.11
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