Farnsworth Company has gathered data on its overhead activities and associated costs for the past 10 months. Tracy Heppler, a member of the controller's department, has convinced management that overhead costs can be better estimated and controlled if the fixed and variable components of each overhead activity are known. One such activity is receiving raw materials (unloading incoming goods, counting goods, and inspecting goods), which she believes is driven by the number of receiving orders. Ten months of data have been gathered for the receiving activity and are as follows: Month Receiving Orders Receiving Cost $ 1 1,000 18,000 2 700 15,000 3 1,500 28,000 4 1,200 17,000 5 1,300 25,000 6 1,100 21,000 7 1,600 29,000 8 1,400 24,000 9 1,700 27,000 10 900 16,000 Assume that Tracy has used the method of least squares on the receiving data and has gotten the following results: Intercept 3,212 Slope 15.15 1. Prepare a cost formula for the receiving activity for a year. Based on this formula, what is the predicted cost of receiving for a year in which 18,000 receiving orders are anticipated? Round your answer to the nearest dollar. $___
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.
Farnsworth Company has gathered data on its overhead activities and associated costs for the past 10 months. Tracy Heppler, a member of the controller's department, has convinced management that overhead costs can be better estimated and controlled if the fixed and variable components of each overhead activity are known. One such activity is receiving raw materials (unloading incoming goods, counting goods, and inspecting goods), which she believes is driven by the number of receiving orders. Ten months of data have been gathered for the receiving activity and are as follows:
| Month | Receiving Orders | Receiving Cost $ | |||
| 1 | 1,000 | 18,000 | |||
| 2 | 700 | 15,000 | |||
| 3 | 1,500 | 28,000 | |||
| 4 | 1,200 | 17,000 | |||
| 5 | 1,300 | 25,000 | |||
| 6 | 1,100 | 21,000 | |||
| 7 | 1,600 | 29,000 | |||
| 8 | 1,400 | 24,000 | |||
| 9 | 1,700 | 27,000 | |||
| 10 | 900 | 16,000 |
Assume that Tracy has used the method of least squares on the receiving data and has gotten the following results:
| Intercept | 3,212 |
| Slope | 15.15 |
1. Prepare a cost formula for the receiving activity for a year. Based on this formula, what is the predicted cost of receiving for a year in which 18,000 receiving orders are anticipated? Round your answer to the nearest dollar.
$_____________
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