1. Assume that during the year the company works only 75,000 machine-hours and incurs the following costs in the Manufacturing Overhead and Work in Process accounts: Manufacturing Work in Overhead Process 21,000 ? (Maintenance) (Indirect materials) (Direct materials) (Direct labor) (Overhead) 710,000 8,000 90,000 (Indirect labor) (Utilities) (Insurance) (Depreciation) 60,000 ? 32,000 7,000 56,000 Copy the data in the T-accounts above onto your answer sheet. Compute the amount of over- head cost that would be applied to Work in Process for the year and make the entry in your T-accounts. 2. Compute the amount of underapplied or overapplied overhead for the year and show the bal- ance in your Manufacturing Overhead T-account. Prepare a journal entry to close the com- pany's underapplied or overapplied overhead to Cost of Goods Sold. 3. Explain why the manufacturing overhead was underapplied or overapplied for the year.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Harwood Company uses a
activity level of 80,000 machine-hours.
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