Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system: Overhead Cost Pool Budgeted Overhead Cost Budgeted Cost Driver Level Cost Driver Machinery depreciation/maintenance $ 168,640 27,200 Machine hours Factory depreciation/utilities/insurance 127,840 27,200 Machine hours Product design 554,400 38,500 Hours in design Material handling 1,078,000 134,750 Pounds of raw materials In addition, Shaver expects to spend $514,368 for 8,037 direct labor-hours. Two current product orders had the following requirements: Men’s Razors Women’s Razors Units produced and sold 20,000 26,000 Direct labor hours 30 40 Pounds of raw materials 860 750 Hours in design 20 23 Machine hours 65 50 Using ABC, how much facility-level overhead is assigned to the current order for Men's Razors?
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.
Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system:
| Budgeted Overhead Cost | Budgeted Cost Driver Level | Cost Driver | ||||
| Machinery |
$ | 168,640 | 27,200 | Machine hours | ||
| Factory depreciation/utilities/insurance | 127,840 | 27,200 | Machine hours | |||
| Product design | 554,400 | 38,500 | Hours in design | |||
| Material handling | 1,078,000 | 134,750 | Pounds of raw materials | |||
In addition, Shaver expects to spend $514,368 for 8,037 direct labor-hours. Two current product orders had the following requirements:
| Men’s Razors | Women’s Razors | |||||
| Units produced and sold | 20,000 | 26,000 | ||||
| Direct labor hours | 30 | 40 | ||||
| Pounds of raw materials | 860 | 750 | ||||
| Hours in design | 20 | 23 | ||||
| Machine hours | 65 | 50 | ||||
Using ABC, how much facility-level overhead is assigned to the current order for Men's Razors?
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