Friedman Company uses JIT manufacturing. There are several manufacturing cells s

Question

Friedman Company uses JIT manufacturing. There are several manufacturing cells set up within one of its factories. One of the cells makes stands for flat-screen televisions. The cost of produc- tion for the month of April is given below. Cell labor Direct materials Overhead Total

During May, 30,000 stands were produced and sold. Required: $ 60,000 150,000 120,000 $330,000

1. Explain why process costing can be used for computing the cost of production for the stands.

3. Explain how activity-based costing can be used to determine the overhead assigned to the cells

Explanation / Answer

Process costing is a process of assigning cost to the manufacturing products based on the process that product undergoes. In todays world, the simplest of product goes through many processes. besides this any big manufacturing unit does manufacture of more than one product. So it is necessary to implement process costing to find out the actual cost of producing products which may have some common processes.

In the given question the their are many manufacturing cells within a factory. So to find out the cost of each manufacturing cell, process cost can be implemented

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