A company absorbs factory overheads at a rate of N$15per direct labour hour. During 2021 all finished goods were sold and under/over-absorbed overheads were transferred to cost of goods sold. There were no opening and closing balances of work in process. Additional information is as follows : Actual direct labour hours:10000 hours Budgeted direct labour hours:11000 hours Building materials 100000
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.
A company absorbs factory
Actual direct labour hours:10000 hours
Budgeted direct labour hours:11000 hours
Building materials 100000
Indirect labour cost:50000
Wages of builders:200000
Indirect materials used:20000
Sundry factory overheads:50000
Calculate amount of under/over absorbed factory overheads for the period?
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