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About this document
- Pages
- 4 pages
- Price
- $4 one-time, yours to keep
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- Included in every plan
- Format
- Subject
- Accounting, Business
- Module
- Week 2 · Week 2
This assignment focuses on Auerbach Enterprises, a company that manufactures air conditioners for automobiles and trucks. It compares the costs of producing two products, MaxiFlow and Alaska, using different overhead costing methods. This case study is for Week 2 of the BUS 630 Managerial Accounting course.
What's inside
- Direct materials and labor costs for MaxiFlow and Alaska
- Overhead costs and machine hours for four manufacturing departments
- Comparison of company-wide and departmental overhead rates
- Impact of overhead costing methods on product costs
Who it is for: Students taking the BUS 630 Managerial Accounting course at Ashford University. (Undergraduate)
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Summary
Auerbach Enterprises makes air conditioners for vehicles. It is considering changing how it assigns overhead costs. Students learn about different costing methods and their effects on products.
Auerbach Enterprises and its products
Auerbach Enterprises makes two air conditioner models: MaxiFlow and Alaska. MaxiFlow has complex parts but is easy to assemble. Alaska has standard parts but a complex assembly process. The company is considering changing its costing method.
Direct costs of production
Direct materials and labor costs differ between the two products. MaxiFlow has higher direct labor costs. Alaska has higher direct materials costs. Machine hours are used to assign overhead costs.
Departmental overhead rates
The company has four manufacturing departments. Each has different overhead costs and machine hours. The new controller is considering using departmental overhead rates instead of a company-wide rate.
Job order and process costing
Job order costing is used for single or numerous products. Process costing is used for a single product line. Both methods monitor direct materials, direct labor and manufacturing overhead.
Key terms
- Direct materials
- The raw materials needed to make a product.
- Direct labor
- The workforce directly involved in making a product.
- Overhead costs
- Indirect costs of production, such as rent and utilities.
- Machine hours
- The time machines are used in production.
- Departmental overhead rates
- The overhead cost per machine hour in each department.
- Job order costing
- A costing method used for single or numerous products.
Questions this document helps with
- Which product has higher direct labor costs?
- How does the new controller plan to change costing?
- What are the differences between job order costing and process costing?
Summary written with AI from the document's text.
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