Appleton Company uses activity-based costing to apply overhead to and Apple glen. Appleton identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Engineering design Purchasing Other overhead Cost R156 000 R96 000 R350 000 Driver Engineering hours Number of parts Direct labour hours Amount of driver 6 000 10 000 50 000 Engineering hour Number of parts Direct labour hours Apple cider 2 400 4 000 Apple glen 3 600 6 000 28 000 22 000 Required: 4.1 Allocate the costs to the two products using the consumption ratios. 4.2 Allocate the costs to the two products using activity rates.
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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