Activity Cost Pool Activity Rates $6 per direct labor-hour $4 per machine-hour $50 per setup $90 per order $14 per shipment $840 per product Supporting direct labor Machine processing . Machine setups Production orders. Shipments .... Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 80 500 Machine-hours 100 1,500 Machine setups 1 4 ... Production orders. 1 4 Shipments .... 1 10 Product sustaining 1 1
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.
Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activitybased costing system contains the following six activity cost pools and activity rates:
Required:
How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
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