Garfield Inc. manufactures entry and dining room lighting fixtures. Five activities are used in manufacturing the fixtures. These activities and their associated budgeted activity costs and activity bases are as follows: Budgeted Activity Activity Cost Activity Base Casting $99,820 Machine hours Assembly 58,900 Direct labor hours Inspecting 21,252 Number of inspections Setup 33,221 Number of setups Materials handling 34,830 Number of loads Corporate records were obtained to estimate the amount of activity to be used by the two products. The estimated activity-base usage quantities and units produced follow: Activity Base Entry Dining Total Machine hours 2,101 1,119 3,220 Direct labor hours 791 2,309 3,100 Number of inspections 724 288 1,012 Number of setups 175 64 239 Number of loads 544 230 774 Units produced 6,569 1,747 8,316
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.
|
|
Budgeted
|
|
|
Activity
|
Activity Cost
|
Activity Base
|
| Casting | $99,820 | Machine hours |
| Assembly | 58,900 | Direct labor hours |
| Inspecting | 21,252 | Number of inspections |
| Setup | 33,221 | Number of setups |
| Materials handling | 34,830 | Number of loads |
|
Activity Base
|
Entry
|
Dining
|
Total
|
| Machine hours | 2,101 | 1,119 | 3,220 |
| Direct labor hours | 791 | 2,309 | 3,100 |
| Number of inspections | 724 | 288 | 1,012 |
| Number of setups | 175 | 64 | 239 |
| Number of loads | 544 | 230 | 774 |
| Units produced | 6,569 | 1,747 | 8,316 |
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
