Angel Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Activity Cost Pools (and Activity Measures Estimated Overhead Cost Machine related (machine-hours) R81 600 Batch setup (setups). R387 000 General factory (direct labour-hours). R274 800 Expected Activity Activity Cost Pools Total Product X Product Y Machine related 8,000 3,000 5,000 Batch setup 10,000 2,000 8,000 General factory 12,000 7,000 5,000 Assuming that actual activity turns out to be the same as expected activity, calculate the total amount of overhead cost allocated to Product X
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.
Angel Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system:
|
|
Estimated |
|
Machine related (machine-hours) |
R81 600 |
|
Batch setup (setups). |
R387 000 |
|
General factory (direct labour-hours). |
R274 800 |
|
|
|
Expected Activity |
|
|
Activity Cost Pools |
Total |
Product X |
Product Y |
|
Machine related |
8,000 |
3,000 |
5,000 |
|
Batch setup |
10,000 |
2,000 |
8,000 |
|
General factory |
12,000 |
7,000 |
5,000 |
Assuming that actual activity turns out to be the same as expected activity, calculate the total amount of overhead cost allocated to Product X.
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