Under the Activity-Based costing, how much is the net income?
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.
Veruska Corporation has provided the following data from its activity-based costing accounting system:
Activity Cost Pools Total Cost Total Activity
Designing products P1,394,000 8,200 product design hours
Setting up batches 16,000 800 batch set-ups
Assembling products 180,000 6,000 assembly hours
Data concerning company’s products:
Selling price per unit P800
Total direct materials 2,500,000
Total direct labor 1,850,000
Selling and Admin expenses 750,300
Units produced 10,000
Units sold 9,200
Actual Product design hours 8,200
Actual batch set-ups 720
Actual Assembly hours 7,000
The entity used product design hours for plant-wide factory overhead.
Under the Activity-Based costing, how much is the net income?
Step by step
Solved in 3 steps
