Aleutian Company produces two products: Rings and Dings. They are manufactured in two departments: Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Direct Labor Hours Per Unit Machine Hours Per Unit Rings 1,000 4 6 Dings 2,000 3 9 All of the machine hours take place in the Fabrication Department, which has estimated total factory overhead of $90,000. All of the labor hours take place in the Assembly Department, which has estimated total factory overhead of $105,000. Aleutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours. The total factory overhead allocated per unit of Dings is a.$23.25 b.$64.50 c.$56.75 d.$65.25
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.
Aleutian Company produces two products: Rings and Dings. They are manufactured in two departments: Fabrication and Assembly. Data for the products and departments are listed below.
Product |
Number of Units |
Direct Labor Hours Per Unit |
Machine Hours Per Unit |
| Rings | 1,000 | 4 | 6 |
| Dings | 2,000 | 3 | 9 |
All of the machine hours take place in the Fabrication Department, which has estimated total factory overhead of $90,000. All of the labor hours take place in the Assembly Department, which has estimated total factory overhead of $105,000.
Aleutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours.
The total factory overhead allocated per unit of Dings is
Product |
Number of Units |
Direct Labor Hours Per Unit |
Total |
| Rings | 1,000 | 4 | 4,000 |
| Dings | 2,000 | 3 | 6,000 |
| Total Direct labor hours | 10,000 | ||
Product |
Number of Units |
Machine Hours Per Unit |
Total |
| Rings | 1,000 | 6 | 6,000 |
| Dings | 2,000 | 9 | 18,000 |
| Total Machine Hours | 24,000 | ||
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