Jordan Company has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: Cost Pool Overhead Costs Cost driver Activity level Supervision of direct labor $326,000 Direct labor-hours 900,000 Machine maintenance $132,000 Machine-hours 960,000 Facility rent $217,000 Square feet of area 100,000 Total overhead costs $675,000 The accounting records show the Mossman Job consumed the following resources: Cost driver Actual level Direct labor-hours 200 Machine-hours 1,500 Square feet of area 70 If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Jordan?
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.
Jordan Company has identified three cost pools to allocate
Cost Pool Overhead Costs Cost driver Activity level
Supervision of direct labor $326,000 Direct labor-hours 900,000
Machine maintenance $132,000 Machine-hours 960,000
Facility rent $217,000 Square feet of area 100,000
Total overhead costs $675,000
The accounting records show the Mossman Job consumed the following resources:
Cost driver Actual level
Direct labor-hours 200
Machine-hours 1,500
Square feet of area 70
If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Jordan?
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