Rabia Company has two support departments, Humon Resources and Maintenance, and two producing deportments, Fabrication and Assembly Support Departments Producing Departments Human Resources Maintenance Fabrication Assembly Budgeted overhead Direct labor hours $40,000 $72,000 $140,000 $160,000 2,000 2,500 8,000 10,000 Machine hours 12,000 8,000 Number of employees 4 15 25 The company only had mixed cost. Human Resource costs are allocated bosed on the number of employees. and maintenance costs are allocated bosed on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labor hours. Required: 1. Calculate the allocation ratios. 2. Using the direct method, allocate the costs of the Human Resources and Maintenance deportments to the Fabrication and Assembly departments. Also write the final cost of both the production deportments. 3. What if the Maintenance Department had 50 employees? How would that offect the allocation of Human Resources Department costs to the Fabricotion and Assembly deportments?
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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