1. Assess this statement: \"Activity-based costing is only useful for manufactur

Question

1. Assess this statement: "Activity-based costing is only useful for manufacturing companies". Do you agree or disagree, why? 2. It is fairly straight forward to combine process costing and activity based costing in one statement. Is it possible to combine job order costing, process costing, and activity based costing in one statement? If so, please provide an example. The period manufacturing costs of a company is comprised of $2,000,000 in direct materials, $1,000,000 in direct labor, and $500,000 in overhead, resulting in 7,000 units of product. Manufacturing operations is consisted of two processes, machining and assembly. Machining takes up 40% of direct materials, 60% of direct labor, and 50% of overhead. Provide a hybrid manufacturing cost statement, containing combined activity based costing and process costing.

Explanation / Answer

All the costing Metod i.e Job Order Costing, Process Costing , Activity Based Costing can be combined in One statement which is called Hybride method   to ascertain the Manufactuin cost in cases of different Process or expense collection statregy is required. Hybrid Manufacturing Statement Detail Cost/Unit Total Machinery Assembly Amount Amount % Amount % Direct Material $285.71 $2,000,000.00 $800,000.00 40% $1,200,000.00 60% Direct labour $142.86 $1,000,000.00 $600,000.00 60% $400,000.00 40% Overhead $71.43 $500,000.00 $250,000.00 50% $250,000.00 50% Total cost $3,500,000.00 $1,650,000.00 $1,850,000.00

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