INFORMATION SUPPLIED BY ABC PROJECT TEAM 2 Compute total activity cost for each product line Cost driver quantity for each product line; Activity Product line cost Cost production Cost driver quantity for each product line Activity cost for each product line Product Pool pools drivers add column G to get total in column D volume line rate STD $5.40 X 100,000 $540,000 A B F J DEL 5.40 96,000 518,400 1 Cost Product Activity Cost for Activity ULT 5.40 34,000 183,600 2 Activity Cost Driver Line Cost per Unit of Product 3 Cost Cost Driver Pool Product Quantity for Product Production Activity Quantity Product Line Volume 3 Compute product çost per unit for each product line Pool Driver Rate Line Line 6 Machine 7 Related $ 1,242,000 Machine 230,000 $ 5.40 STD 10,000 $ 100,000 S 96,000 34,000 540,000 54.00 Activity cost for each product line Product Product line Activity cost per unit of product Hours DEL 518,400 8,000 64.80 8. ULT 183,600 2,000 line production volume 91.80 9 Total 230,000 $ 1,242,000 $540,000 $54.00 64.80 STD 10,000 ABC CALCULATIONS DEL 518,400 8,000 ULT 183,600 2,000 91.80 1 Compute pool rate for machine-related açtivity The remaining three columns in Exhibit 5–6, columns E, H, and J, contain the amounts that are computed during the ABC calculations, and they appear in red. Cost Activity cost pool Pool driver rate quantity Amounts Computed During ABC Calculations (Exhibit 5–6) $1,242,000 ÷ 230,000 = $5.40 Column E Pool rate Column H Activity cost for each product line Column J Activity cost per unit of product for each product line
INFORMATION SUPPLIED BY ABC PROJECT TEAM 2 Compute total activity cost for each product line Cost driver quantity for each product line; Activity Product line cost Cost production Cost driver quantity for each product line Activity cost for each product line Product Pool pools drivers add column G to get total in column D volume line rate STD $5.40 X 100,000 $540,000 A B F J DEL 5.40 96,000 518,400 1 Cost Product Activity Cost for Activity ULT 5.40 34,000 183,600 2 Activity Cost Driver Line Cost per Unit of Product 3 Cost Cost Driver Pool Product Quantity for Product Production Activity Quantity Product Line Volume 3 Compute product çost per unit for each product line Pool Driver Rate Line Line 6 Machine 7 Related $ 1,242,000 Machine 230,000 $ 5.40 STD 10,000 $ 100,000 S 96,000 34,000 540,000 54.00 Activity cost for each product line Product Product line Activity cost per unit of product Hours DEL 518,400 8,000 64.80 8. ULT 183,600 2,000 line production volume 91.80 9 Total 230,000 $ 1,242,000 $540,000 $54.00 64.80 STD 10,000 ABC CALCULATIONS DEL 518,400 8,000 ULT 183,600 2,000 91.80 1 Compute pool rate for machine-related açtivity The remaining three columns in Exhibit 5–6, columns E, H, and J, contain the amounts that are computed during the ABC calculations, and they appear in red. Cost Activity cost pool Pool driver rate quantity Amounts Computed During ABC Calculations (Exhibit 5–6) $1,242,000 ÷ 230,000 = $5.40 Column E Pool rate Column H Activity cost for each product line Column J Activity cost per unit of product for each product line
Pkg Acc Infor Systems MS VISIO CD
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Chapter15: Integrated Production Processes (ipps)
Section: Chapter Questions
Problem 1SP
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Concept explainers
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.
Topic Video
Question
Explain the concept of a pool rate in activity-based costing.
Transcribed Image Text:INFORMATION SUPPLIED
BY ABC PROJECT TEAM
2 Compute total activity cost for each product line
Cost driver quantity for
each product line;
Activity
Product line
cost
Cost
production
Cost driver quantity
for each product line
Activity cost for
each product line
Product
Pool
pools
drivers
add column G to get total in column D
volume
line
rate
STD
$5.40
X
100,000
$540,000
A
B
F
J
DEL
5.40
96,000
518,400
1
Cost
Product
Activity
Cost for
Activity
ULT
5.40
34,000
183,600
2
Activity
Cost
Driver
Line
Cost
per Unit
of Product
3
Cost
Cost
Driver
Pool
Product
Quantity for
Product
Production
Activity
Quantity
Product Line
Volume
3 Compute product çost per unit for each product line
Pool
Driver
Rate
Line
Line
6 Machine
7 Related
$ 1,242,000 Machine
230,000 $
5.40
STD
10,000 $
100,000 S
96,000
34,000
540,000
54.00
Activity cost for
each product line
Product
Product line
Activity cost per
unit of product
Hours
DEL
518,400
8,000
64.80
8.
ULT
183,600
2,000
line
production volume
91.80
9
Total
230,000 $ 1,242,000
$540,000
$54.00
64.80
STD
10,000
ABC CALCULATIONS
DEL
518,400
8,000
ULT
183,600
2,000
91.80
1 Compute pool rate for
machine-related açtivity
The remaining three columns in Exhibit 5–6, columns E, H, and J, contain the
amounts that are computed during the ABC calculations, and they appear in red.
Cost
Activity
cost pool
Pool
driver
rate
quantity
Amounts Computed During ABC Calculations (Exhibit 5–6)
$1,242,000 ÷ 230,000 = $5.40
Column E
Pool rate
Column H
Activity cost for each product line
Column J
Activity cost per unit of product for each product line
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