JYD Corporation has identified activity centers to which overhead cost are assigned. The cost pool amounts for these centers and their selected activity drivers for 2021 follows: Activity Centers Costs Activity Drivers Set-ups $310,000 12,400 set-ups Utilities 475,000 62,500 machine hours No. of parts 160,000 8,000 parts Direct costs of producing product X amounted to P37,500. The said product took 8,500 direct labor hours and 7,500 machine hours to finish. Also, the product needed 3,750 set-ups and 275 parts to complete. 12,500 units of product X were produced during 2021. a. How much was the full cost per unit of product X using Activity Based Costing?
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.
JYD Corporation has identified activity centers to which overhead cost are assigned. The cost pool amounts for these centers and their selected activity drivers for 2021 follows:
Activity Centers Costs Activity Drivers
Set-ups $310,000 12,400 set-ups
Utilities 475,000 62,500 machine hours
No. of parts 160,000 8,000 parts
Direct costs of producing product X amounted to P37,500. The said product took 8,500 direct labor hours and 7,500 machine hours to finish. Also, the product needed 3,750 set-ups and 275 parts to complete. 12,500 units of product X were produced during 2021.
a. How much was the full cost per unit of product X using Activity Based Costing?
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