Two-Stage ABC for Manufacturing Merlot Company has determined its activity cost pools and cost drivers to be the following: Cost Pools Setup $84,000 Material handling 19,200 Machine operation 360,000 Packing 60,000 Total indirect manufacturing costs $523,200 Cost drivers Setups Material moves 350 640 Machine hours 20,000 Packing orders 1,200 One product made by Merlot, metal casements, used the following activities during the period to produce 500 units: Setups 20 Material moves 80 Machine hours 1,900 Packing orders 150
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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