Activity Costs Testing components $1,200,000 Reordering components 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X 30Υ 125X 30Υ Unit purchase price Units purchased Failed tests $10 $26 $12 $28 120,000 60,000 15,000 15,000 1,200 780 10 10 Number of reorders 60 40
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.
Activity-Based Supplier Costing
Clearsound uses Alpha Electronics and La Paz company to buy two electronic components used in the manufacture of its cell phones: Component 125X and component 30Y. Consider two activities: Testing components and reordering components. After the two components are inserted, Testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Acitivity cost information and other data needed for supplier costing are as follows:
1. Activity costs caused by suppliers(testing failures and reordering as a result)
Required :
Determine the cost of each supplier by using ABC. Round Unit costs to two decimal places.
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