Assume that the following cost-univer volumes occurred in Jalludiy, yedi z. Number of units produced Direct labor-hours Number of purchase orders Direct materials costs Number of production runs Machine-hours Silver 32,000 2,000 7 $ 97,500 2 700 0 32,000 Gold 10,000 1,200 6 $ 60,000 Platinum 3,000 400 3 $ 37,500 5 100 3 3,000 3 175 2 Number of inspections Units shipped 10,000 Labor costs are based on the contractual rate of $25 per hour. Required: a. Compute the predetermined rate for year 2 for use in the current product-costing system using direct labor-hours as the allocation base. b. Compute the per-unit production costs for each model for January using direct labor-hours as the allocation base and the predetermined rate computed in requirement (a). c. Compute the predetermined overhead rate for year 2 for each cost driver using the estimated costs and estimated cost driver units prepared by the controller's staff to be used in an ABC system.
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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Since there are multiple subparts, we will answer only first three subparts.
Overhead costs means all type of indirect costs being incurred in business. These costs can not be allocated directly to products and services. Some cost driver needs to be used for overhead costs allocation.
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