Your answer RHIANE CO. provided the following data from its activity-based costing systems: Activity Cost Pool Assembly Processing Orders Inspection Total Activity 29,000 machine hours 1,400 orders Total Cost P313,490 49,476 73,882 1,060 inspection-hours The company makes 490 units of products R14 a year, requiring a total of 1,080 machine-hours, 60 orders, and 20 inspection hours per year. The product's direct material cost is P46.42 per unit and its direct labor cost is P20.22 per unit. Compute the average cost per unit of product R14 using ABC system? Your answer
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.
Compute the average cost per unit of product R14 using ABC system.
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