Direct Apex Corporation manufactures two products, Product DAC and Product DIB. Product DIB requires two hours of direct labour time per unit to manufacture compared to one hour of direct labour time for Product DAC. Overhead is currently assigned to the products on the basis of direct-labour-hours. The company estimated it would incur $450,000 in manufacturing overhead costs and produce 30,000 units of Product DAC and 7,500 units of Product DIB during the current year. Unit costs for materials and direct labour are: Product DAC Product DIB Direct material $24 $35 Direct labour $10 $20 If the company allocates all of its overhead based on direct labour-hours, the unit product cost of Product DAC would be closest to: Question 14 options: 1) $60.00 2) $34.00 3) $44.00 4) $54.00
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.
Q1
Direct Apex Corporation manufactures two products, Product DAC and Product DIB. Product DIB requires two hours of direct labour time per unit to manufacture compared to one hour of direct labour time for Product DAC.
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Product DAC |
Product DIB |
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Direct material |
$24 |
$35 |
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Direct labour |
$10 |
$20 |
If the company allocates all of its overhead based on direct labour-hours, the unit product cost of Product DAC would be closest to:
Question 14 options:
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Q2
Delight Business Ltd (DIB) manufactures two products, Product L11 and Product L12. The company is considering adopting an activity-based costing system with the following activity pools, activity measures, and expected activity:
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Expected Activity
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Activity Cost Pools
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Estimated Overhead Cost
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Product L11
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Product L12
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Total |
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Machine setups required
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$200,000
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600
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1,400
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2,000
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Purchase orders issued
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38,382
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500
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100
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600
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Machine-hours required
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92,650
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6,800
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10,200
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17,000
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$331,032
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The amount overhead costs assigned to Product L12 would be closest to:
Question 15 options:
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