Determine the activity rate for each activity. Activity Activity Rate Facilities $ per sq. ft. Instruction $ per section
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.
Troglodyte University uses activity-based costing to assign indirect costs to academic departments, using three activities. The activity base, budgeted activity cost, and estimated activity-base usage for each activity are identified as follows:
Activity
Activity Base Budgeted
Activity Cost Activity-Base
Usage
Facilities Square feet $800,000 80,000 square feet
Instruction Number of course sections 1,200,000 600 sections
Student services Number of students 290,000 2,500 students
The activity-base usage associated with the Archaeology and Geology departments is as follows:
Department Facilities Instruction Student Services
Archaeology 8,000 square feet 8 sections 150 students
Geology 5,200 square feet 15 sections 200 students
a. Determine the activity rate for each activity.
Activity Activity Rate
Facilities $
per sq. ft.
Instruction $
per section
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