All costs incidental to materials procurement and handling until they are issued are charged to the materials account by Cruz Mfg. Co. at a rate predetermined for each of the departments involved. For 19C, the estimated departmental costs are given: Purchasing department P175,000 Receiving and Inspection Dept. 124,500 Materials department 83,000 Accounting department (20% is estimated to be related to processing of payments for materials. 295,000 Purchases for 19C were estimated to amount to P5, 000,000 for more or less 8,300,000 units to be ordered 50 times. Actual purchases for 19C amounted to P5, 600,000 for total of 8,000,000 units in 52 orders. Costs incurred by the four given departments were as follows: Purchasing department P180,000 Receiving and inspection department 128,000 Materials department 78,000 Accounting department (20% is estimated to be related to processing of payments for materials. 290,000 Required: a. Compute for the predetermined departmental overhead rates. b. How much is the applied material handling cost per department? c. How much is the material handling variance?
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.
All costs incidental to materials procurement and handling until they are issued are charged to
the materials account by Cruz Mfg. Co. at a rate predetermined for each of the departments
involved.
For 19C, the estimated departmental costs are given:
Purchasing department P175,000
Receiving and Inspection Dept. 124,500
Materials department 83,000
Accounting department (20% is
estimated to be related to
processing of payments for
materials.
295,000
Purchases for 19C were estimated to amount to P5, 000,000 for more or less 8,300,000
units to be ordered 50 times.
Actual purchases for 19C amounted to P5, 600,000 for total of 8,000,000 units in 52
orders. Costs incurred by the four given departments were as follows:
Purchasing department P180,000
Receiving and inspection
department
128,000
Materials department 78,000
Accounting department (20% is
estimated to be related to
processing of payments for
materials.
290,000
Required:
a. Compute for the predetermined departmental
b. How much is the applied material handling cost per department?
c. How much is the material handling variance?
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