3. Muscat Manufacturing is a small manufacturer that uses machine-hours as its activity base for assigned overhead costs to jobs. The company estimated the following amounts for 2017 for the company: Company Direct materials OMR 60,000 Direct labor OMR 25,000 Manufacturing overhead costs OMR 72,000 Machine hours 90,000 During 2017, the actual machine-hours totaled 95,000, and actual overhead costs were OMR 71,000. (a) Compute the predetermined overhead rate. (b) Compute the manufacturing overhead applied. (c) How much overhead is over or underapplied for the year for the company? State amount and whether it is over- or underapplied.
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.
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