Required: 1. Compute the product margins for the Xtreme and the Pathfinder products under the company's traditional costing system. 2. The company is considering replacing its traditional costing system with an activity based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization sustaining costs and ide capacity costs: Activities and (Activity) Supporting direct labor (direct labor-hour] Product staining (number of products) Other Total manufacturing overhead Expected Activity 42,000 Overhead Coat St Pathfinder Total Eatinated $631,300 876,000 460,000 65,700 32,033,000 $5,000 101,000 320 730 2 Compute the product margins for the Xtreme and the Pathfinder products under the activity based costing system. 3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
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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