Chhom, Inc., manufactures and sells two products: Product F9 and Product U4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Product F9 500 4 2,000 Product U4 1,000 2 2,000 Total direct labor-hours 4,000 The direct labor rate is $25.50 per DLH. The direct materials cost per unit is $274 for Product F9 and $222 for Product U4. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product F9 Product U4 Total Labor-related DLHs $ 31,900 2,000 2,000 4,000 Production orders orders 50,640 600 1,000 1,600 Order size MHs 103,200 3,300 2,600 5,900 $ 185,740 If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product U4 would be closest to: (Round your intermediate calculations to 2 decimal places.) Multiple Choice A. $92.88 per unit B. $25.32 per unit C. $15.96 per unit D. $63.80 per unit
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.
Chhom, Inc., manufactures and sells two products: Product F9 and Product U4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:
| Product F9 | 500 | 4 | 2,000 |
| Product U4 | 1,000 | 2 | 2,000 |
| Total direct labor-hours | 4,000 | ||
The direct labor rate is $25.50 per DLH. The direct materials cost per unit is $274 for Product F9 and $222 for Product U4.
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
| Estimated | Expected Activity | |||||
| Activity Cost Pools | Activity Measures | Overhead Cost | Product F9 | Product U4 | Total | |
| Labor-related | DLHs | $ | 31,900 | 2,000 | 2,000 | 4,000 |
| Production orders | orders | 50,640 | 600 | 1,000 | 1,600 | |
| Order size | MHs | 103,200 | 3,300 | 2,600 | 5,900 | |
| $ | 185,740 | |||||
If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product U4 would be closest to: (Round your intermediate calculations to 2 decimal places.)
Multiple Choice
A. $92.88 per unit
B. $25.32 per unit
C. $15.96 per unit
D. $63.80 per unit
Given,
Total estimated overhead = $185,740
Total direct labor hours = 4,000
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