It is fairly straight forward to combine process costing and activity based cost
ID: 362334 • Letter: I
Question
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
Job order costing, process costing, and action based costing can be combined in onestatement which is called Hybrid or blended frameworks which are utilized as a part of circumstances where more than one expense collection strategy is required.
These costing systems used particularly and as a bit of blend to outfit various styles of business or to pass on a regular focus or perspective viewpoint on an association's costs. Basically these costing systems are used by associations to choose the cost of a thing, such that the relationship to the pay delivered can be set up and reports or quotes made. These costing system picked will give a not in any way like focus and perspective.
Given,
Total Direct material= $2000000
Total Direct labor= $1000000
Product units= 7000 units
Total Overheads= $500000
Direct materials on machinery = $ 800,000(40%)
Direct labor on machinery = $ 600,000(60 %)
Overhead on machinery = $ 250,000(50 %)
Direct materials on assembly = $ 1200,000
Direct labor on assembly = $ 400,000
Overhead on assembly = $ 250,000
Hybrid manufacturing statement
particular
Machinery (40%)in $
Assembly (60%)in $
Total in $
Direct material
Direct labor
overhead
800000
600000
250000
1200000
400000
250000
2000000
1000000
500000
total
1650000
1850000
3500000
Direct material cost per unit = 2000000/7000 = 285.714 per unit
Direct labor per unit = 1000000/700 = 142.857 per unit
Overhead cost per unit = 500000/7 = 71.4285 per unit
particular
Machinery (40%)in $
Assembly (60%)in $
Total in $
Direct material
Direct labor
overhead
800000
600000
250000
1200000
400000
250000
2000000
1000000
500000
total
1650000
1850000
3500000
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