Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow: Standard Model Deluxe Model Number of machine hours 26,500 31,500 Number of material moves 625 925 Number of setups 85 575 Total estimated overhead costs are $382,020, of which $186,000 is assigned to the material handling cost pool and $196,020 is assigned to the setup cost pool Im not understadning how to find the over head costs
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.
Julio produces two types of calculator, standard and deluxe. The company is currently using a traditional costing system with machine hours as the cost driver but is considering a move to activity-based costing. In preparing for the possible switch, Julio has identified two cost pools: materials handling and setup. The collected data follow:
| Standard Model | Deluxe Model | |||
| Number of machine hours | 26,500 | 31,500 | ||
| Number of material moves | 625 | 925 | ||
| Number of setups | 85 | 575 | ||
Total estimated overhead costs are $382,020, of which $186,000 is assigned to the material handling cost pool and $196,020 is assigned to the setup cost pool
Im not understadning how to find the over head costs
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