Power Company manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $457,920 payroll for 5,088 direct labor-hours. Listed below is cost driver information used in the product-costing system: Overhead Cost Pool Machine setup's Materials handling Quality control Other overhead cost Total overhead Budgeted Overhead. Cost Driver $ 127,200 108,000 336,000 147,600 $ 718,800 A current product order has the following requirements: Machine setups Materials handling. Quality inspections Machine hours Direct labor hour 7 setups 618 barrels 92 inspections 842 machine hours. 348 hours Number of setups Number of barrels Number of inspections Number of machine hours Using activity-based costing, how much machine setup overhead is assigned to the order? Estimated Cost Driver Level 120 setups 9,000 barrels 1,400 inspections 12,300 machine hours.
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.
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