BUS 630 Week 2 Written Assignment Case 3A (Auerbach Enterprises)
Auerbach Enterprises manufactures air conditioners for automobiles and trucks manufactured throughout North America. The company designs its products with flexibility to accommodate many makes and models of automobiles and trucks. The company’s two main products are MaxiFlow and Alaska. MaxiFlow uses a few complex fabricated parts, but these have been found easy to assemble and test. On the other hand, Alaska uses many standard parts but has a complex assembly and testing process. MaxiFlow requires direct materials costs which total $135 per unit, while Alaska’s direct materials requirements total $110 per unit. Direct labor costs per unit are $75 for MaxiFlow and $95 for Alaska.
Auerbach Enterprises uses machine hours as the cost driver to assign overhead costs to the air conditioners. The company has used a company-wide predetermined overhead rate in past years, but the new controller, Bennie Leon, is considering the use of departmental overhead rates beginning with the next year. The following planning information is available for the next year for each the four manufacturing departments within the company:
BUS 630 Week 2 Discussion Question 1, Product Costs
In Chapter 3, you were introduced to three types of costs associated with a manufactured product – direct materials, direct labor, and manufacturing overhead. Explain how these costs are …..with the manufactured product. Why are some of these costs …..to the product through costing methods such as job order costing or process costing? As part of your response, be sure to provide a specific example of a company’s manufacturing costs.
BUS 630 Week 2 Discussion Question 2, Job Order Costing vs. Process Costing
Explain the similarities and differences between job order costing and process costing. In your explanation, provide examples of when job order costing and process costing would be most appropriate. Your initial post should be 200 to 250 words.