Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and testing than does Decoder Q. Because of these product differences, the company wants to use activity- based costing to allocate overhead costs. It has identified four activity pools. Relevant information follows. Activity Pools Cost Pool Total Cost Driver Repair and maintenance on assembly machine $ 104,000 Number of units produced Programming cost 168,000 Number of programming hours Software inspections 12,000 Number of inspections Product testing 16,000 Number of tests Total overhead cost $300,000 Expected activity for each product follows. Number of Units Number of Programming Hours Number of Inspections Number of Tests Decoder P 16,000 2,000 190 1,400 Decoder Q 36,000 1,500 60 1,100 Total 52,000 3,500 250 2,500
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.
5-6A :
-
Compute the
overhead rate for each activity pool. -
Determine the overhead cost allocated to each product.
**Need Help with 5-7A, having to use excel**
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
