Two-Stage ABC for Manufacturing Detroit Foundry, a large manufacturer of heavy equipment components, has determined the following activity cost pools and cost driver levels for the year: Activity Cost Driver 12,000 setup hours 2,000 tons of materials 10,000 machine hours Activity Cost Pool Activity Cost Machine setup $ 660,000 Material handling 100,000 Machine operation 450,000 The following data are for the production of single batches of two products, C23 Cams and U2 Shafts: C23 Cams U2 Shafts 500 300 4 200 5 400 $10,000 $5,000 $30,000 $ 20,000 Units produced Machine hours Direct labor hours Direct labor cost Direct materials cost Tons of materials Setup hours 12.5 3 U2 Shafts 8 7 Determine the unit costs of C23 Cams and U2 Shafts using ABC. (Round answers to the nearest cent.) C23 Cams
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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