In its first year of operations a company produced and sold 70,000 units of Product A and 17,500 units of Product B. Additional information relating to the company's only two products is shown below: Product A Product B Total Direct materials $ 436,300 $ 251,700 $ 688,000 Direct labor $ 200,000 $ 104,000 $304,000 The company's direct labor wage rate is $20 per hour. It created an activity-based costing system that allocated all of its manufacturing overhead costs to three activities as follows Activity Cost Pool (and Activity Measure) Product A Machining (machine-hours) Manufacturing Overhead Product B $ 213,500 Activity Total 90,000 62,500 152,500
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.
![In its first year of operations a company produced and sold 70,000 units of Product A and
17,500 units of Product B. Additional information relating to the company's only two
products is shown below:
Product A Product B
Total
Direct materials
$ 436,300 $ 251,700 $ 688,000
Direct labor $ 200,000 $104,000 $304,000
The company's direct labor wage rate is $20 per hour. It created an activity-based costing
system that allocated all of its manufacturing overhead costs to three activities as follows:
Activity Cost Pool (and Activity
Measure)
Product A
Machining (machine-hours)
Setups (setup hours)
Product design (number of products)
Total manufacturing overhead cost
Manufacturing
Overhead
Product B
$ 213,500
157,500
237,000
$ 608,000
Activity
Total
90,000 62,500 152,500
75
300
375
1
1
2
According to the company's activity-based costing system, the total product cost
assigned to Product A would be:
Multiple Choice
$922,300.
$902,300.
$912,300.
$908,300.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3612b6a1-e7ac-468a-9343-1ae8954f46cf%2F0c1f44ed-c492-43a4-964b-28493638c7ec%2Fx6jrtug_processed.png&w=3840&q=75)
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