Estimated Estimated Cost Drivers Activity Cost Overhead Street Mountain Pools Costs Tires Tires Machine set ups $ 90,000 150 350 Assembling $500,000 25,000 15,000 Inspection $400,000 180 320 Question Based on Schwynn’s actual activity in March, presented below, determine the applied overhead assigned to mountain tires using the activity-based costing approach: Cost Driver Activity Cost Pool Mountain Tires Machine set ups 12 Assembling 2,080 Inspection 15
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.
|
|
Estimated |
Estimated Cost Drivers |
|
|
Activity Cost |
Overhead |
Street |
Mountain |
|
Pools |
Costs |
Tires |
Tires |
|
Machine set ups |
$ 90,000 |
150 |
350 |
|
Assembling |
$500,000 |
25,000 |
15,000 |
|
Inspection |
$400,000 |
180 |
320 |
Question
Based on Schwynn’s actual activity in March, presented below, determine the applied overhead assigned to mountain tires using the activity-based costing approach:
|
|
Cost Driver |
|
Activity Cost Pool |
Mountain Tires |
|
Machine set ups |
12 |
|
Assembling |
2,080 |
|
Inspection |
15 |
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