Rondeau, Incorporated, manufactures and sells two products: Product V9 and Product M6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Product V9 Product M6 Product V9 Product M6 Total direct labor-hours The direct labor rate is $25.20 per DLH. The direct materials cost per unit for each product is given below: A Direct Materials Cost per Unit $280.60 $ 173.80 Labor-related. Product testing Order size Activity Cost Pools Traditional unit product cost ABC unit product cost Difference Expected Production 440 540 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Product V9 $ Direct Labor-Hours Per Unit Activity Measures Estimated Overhead Cost DLHS Tests MHS $ 98,156 72,408 391,000 $ 561,564 0.00 $ 10.4 7.4 Product M6 Total Direct Labor-Hours 4,576 3,996 8,572 0.00 Required: Calculate the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products. (Round your intermediate calculations and final answers to 2 decimal places. Enter your answers as positive values.) Product V9 4,576 810 4,600 Expected Activity Product M6 3,996 1,080 4,160 Total 8,572 1,890 8,760
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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