1. How much overhead cost would be assigned to Product J00A using the company's activity-based costing system? 2. How much overhead cost would be assigned to Product S06U using the company's activity-based costing 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.
Az-Zain Sdn Bhd uses the following activity rates from its activity-based costing to assign
|
Activity Cost Pools |
Activity Rate |
|
Setting up batches |
RM86.50 per batch |
|
Assembling products |
RM4.63 per assembly hour |
|
Processing customer orders |
RM52.16 per customer order |
Data concerning two products appear below:
|
Product J00A |
Product S06U |
|
|
Number of batches |
34 |
43 |
|
Number of assembly hours |
105 |
812 |
|
Number of customer orders |
17 |
32 |
1. How much overhead cost would be assigned to Product J00A using the company's activity-based costing system?
2. How much overhead cost would be assigned to Product S06U using the company's activity-based costing system?
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