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Problem - ABC Company uses job-order costing for its brand new line machines. The cost incurred for production during 2019 totalled $7,000 of materials, $2,500 of direct labour costs, and $1,000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totalled $5,500, and the ending balance is $2,500. During the year, the company completed 20 machines. How much is the cost per machine? What is the benefit for the company to know the cost per machine?
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This individual assignment is based on the TerraCycle Inc.
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A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.
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