SIMPly Power Inc., manufactures and sells two products: Product V9 and Product B1. Data concerning the expected production of each product and the expected total direct labour-hours (DLHs) required to produce that output is shown below: Expected Production Direct Labour-Hours Per Unit Total Direct Labour-Hours Product V9 300 5.0 1,500 Product B1 800 3.0 2,400 Total direct labour-hours 3,900 The direct labour rate is $27.40 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit Product V9 $176.90 Product B1 $262.80 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Estimated Expected Activity Activity Cost Pools Activity Measures Overhead Cost Product V9 Product B1 Total Labour-related DLHs $94,848 1,500 2,400 3,900 Machine setups setups 36,990 300 200 500 General factory MHs 62,408 3,000 2,800 5,800 $194,246 The unit product cost of Product V9 under activity-based costing is closest to: Question 12 options: 1) $490.49 per unit 2) $421.50 per unit 3) $562.95 per unit 4) $617.08 per unit
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.
SIMPly Power Inc., manufactures and sells two products: Product V9 and Product B1. Data concerning the expected production of each product and the expected total direct labour-hours (DLHs) required to produce that output is shown below:
| Expected Production | Direct Labour-Hours Per Unit | Total Direct Labour-Hours | |
| Product V9 | 300 | 5.0 | 1,500 |
| Product B1 | 800 | 3.0 | 2,400 |
| Total direct labour-hours | 3,900 |
The direct labour rate is $27.40 per DLH. The direct materials cost per unit for each product is given below:
| Direct Materials Cost per Unit | |
| Product V9 | $176.90 |
| Product B1 | $262.80 |
The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:
| Estimated | Expected Activity | |||||
Activity Cost Pools |
Activity Measures | Overhead Cost | Product V9 | Product B1 | Total |
|
| Labour-related | DLHs | $94,848 | 1,500 | 2,400 | 3,900 |
|
| Machine setups | setups | 36,990 | 300 | 200 | 500 |
|
| General factory | MHs | 62,408 | 3,000 | 2,800 | 5,800 |
|
| $194,246 |
|
The unit product cost of Product V9 under activity-based costing is closest to:
Question 12 options:
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