Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pools Assembling products Processing customer orders Setting up batches Activity Rate $ 6.81 per assembly hour $71.38 per customer order $88.09 per batch Data for one of the company's products follow: Product P59G Number of assembly hours 250 Number of customer orders 50 Number of batches 65 The company produced 4,000 units of product during the period. Direct materials cost $7.30 per unit and direct labor cost $5.45 per unit. How much overhead cost would be assigned to Product P59G using the activity-based costing system?
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.
Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:
| Activity Cost Pools | Activity Rate | ||
| Assembling products | $ | 6.81 | per assembly hour |
| Processing customer orders | $ | 71.38 | per customer order |
| Setting up batches | $ | 88.09 | per batch |
Data for one of the company's products follow:
| Product P59G | |||
| Number of assembly hours | 250 | ||
| Number of customer orders | 50 | ||
| Number of batches | 65 | ||
The company produced 4,000 units of product during the period. Direct materials cost $7.30 per unit and direct labor cost $5.45 per unit. How much overhead cost would be assigned to Product P59G using the activity-based costing system?
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