Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. Activity Cost Cost Driver Material handling $ 225,000 Number of parts Material insertion 2,475,000 Number of parts Automated machinery 840,000 Machine hours Finishing 170,000 Direct labor hours Packaging 170,000 Orders shipped Total $ 3,880,000 The following information pertains to the three product lines for next year: Economy Standard Deluxe Units to be produced 10,000 5,000 2,000 Orders to be shipped 1,000 500 200 Number of parts per unit 10 15 25 Machine hours per unit 1 3 5 Labor hours per unit 2 2 2 What is Barnett's pool rate for the packaging activity? Group of answer choices a. $4.86 per machine hour. b. $100.00 per order shipped. c. $5.00 per labor hour. d. $10.00 per part. e. None of the answers is correct.
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.
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.
| Activity | Cost | Cost Driver | ||
| Material handling | $ | 225,000 | Number of parts | |
| Material insertion | 2,475,000 | Number of parts | ||
| Automated machinery | 840,000 | Machine hours | ||
| Finishing | 170,000 | Direct labor hours | ||
| Packaging | 170,000 | Orders shipped | ||
| Total | $ | 3,880,000 |
| Economy | Standard | Deluxe | |||||||||
| Units to be produced | 10,000 | 5,000 | 2,000 | ||||||||
| Orders to be shipped | 1,000 | 500 | 200 | ||||||||
| Number of parts per unit | 10 | 15 | 25 | ||||||||
| Machine hours per unit | 1 | 3 | 5 | ||||||||
| Labor hours per unit | 2 | 2 | 2 |
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