Action Corporation, which applies manufacturing overhead on the basis of labor hours, has provided the following data for its most recent year of operations. Estimated labor hours were 3,900. Actual labor hours were 3800. Note that labor hours are used. Estimated manufacturing overhead $137,080 Estimated machine-hours 3,800 Actual manufacturing overhead $137,000 Actual machine-hours 3,780 The predetermined overhead rate is closest to: $36.60 $35.66 $36.24 $35.15 None of the above Please show the work
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.
Action Corporation, which applies manufacturing
| Estimated manufacturing overhead |
$137,080 |
| Estimated machine-hours | 3,800 |
| Actual manufacturing overhead | $137,000 |
| Actual machine-hours | 3,780 |
The predetermined overhead rate is closest to:
$36.60
$35.66
$36.24
$35.15
None of the above
Please show the work
Formula:
Predetermined overhead rate = Estimated manufacturing overhead / Estimated labor hours
Division of estimated manufacturing overhead with estimated labor hours derives the predetermined overhead rate.
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