Aggregator Industries does cement pouring jobs for homes and businesses. Below is information related to its Overhead application: Estimated Overhead Cost $ 240,000 Estimated Direct Labor Hours 29,000 Actual Direct Labor Hours 31,587 Estimated Machine Hours 74,000 Actual Machine Hours 68,541 Depreciation of Mixing Equipment $ 48,000 Depreciation of Pouring Equipment $ 52,000 Fuel for Cement Truck $ 3,900 Factory Supervisor Salaries $ 104,000 Advertising Expense $ 2,850 Rent Expense for Cement Yard $ 23,000 Required: Determine the Predetermined Overhead Rate if the Cost Driver is Direct Labor Hours. Calculate the Over/Underapplied Overhead. Create a journal entry to dispose of the Over/Underapplied Overhead. Repeat steps 1-3, but with Machine Hours as the Cost Driver.
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.
Aggregator Industries does cement pouring jobs for homes and businesses. Below is information related to its
| Estimated Overhead Cost | $ 240,000 |
|---|---|
| Estimated Direct Labor Hours | 29,000 |
| Actual Direct Labor Hours | 31,587 |
| Estimated Machine Hours | 74,000 |
| Actual Machine Hours | 68,541 |
| $ 48,000 | |
| Depreciation of Pouring Equipment | $ 52,000 |
| Fuel for Cement Truck | $ 3,900 |
| Factory Supervisor Salaries | $ 104,000 |
| Advertising Expense | $ 2,850 |
| Rent Expense for Cement Yard | $ 23,000 |
Required:
- Determine the Predetermined Overhead Rate if the Cost Driver is Direct Labor Hours.
- Calculate the Over/Underapplied Overhead.
- Create a
journal entry to dispose of the Over/Underapplied Overhead. - Repeat steps 1-3, but with Machine Hours as the Cost Driver.
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