Artopex is a manufacturing company that produces custom made furniture pieces made of real wood, which is sourced from the wide Canadian forests and local trees. The nature and uniqueness of their products means that the company must use a job costing system, while their dependency on labor allows them to work with only one Manufacturing Overhead cost pool and allocates MO costs using Direct Labor hours as the cost allocation base. For the year 2020, the company estimated that their budgeted direct material costs will be $2,250,000. Their Budgeted Direct Labor costs at $1,700,000, and their budgeted manufacturing overhead costs at $3,060,000. As their fiscal year concluded, the company managers were able to collect actual costs incurred throughout the year, which were 2,150,000 of Direct Materials; 1,650,000 of Direct Labor, and 3,217,500 of MO costs. Required: Calculate the Manufacturing Overhead Allocation Rate for the year 2020 for both the budgeted and the actual During the month of May, job#544 had the following information: Direct Materials used were a total of $55,000 and Direct Labor costs were a total of $45,000. What is the Total cost of the job#544 using (1) Actual Costing and (2) Normal Costing? Explain why do you think the managers at Artopex might prefer to use normal costing instead of Actual Costing?
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.
Artopex is a manufacturing company that produces custom made furniture pieces made of real wood, which is sourced from the wide Canadian forests and local trees. The nature and uniqueness of their products means that the company must use a
For the year 2020, the company estimated that their budgeted direct material costs will be $2,250,000. Their Budgeted Direct Labor costs at $1,700,000, and their budgeted manufacturing overhead costs at $3,060,000.
As their fiscal year concluded, the company managers were able to collect actual costs incurred throughout the year, which were 2,150,000 of Direct Materials; 1,650,000 of Direct Labor, and 3,217,500 of MO costs.
Required:
- Calculate the Manufacturing Overhead Allocation Rate for the year 2020 for both the budgeted and the actual
- During the month of May, job#544 had the following information: Direct Materials used were a total of $55,000 and Direct Labor costs were a total of $45,000. What is the Total cost of the job#544 using (1) Actual Costing and (2) Normal Costing?
- Explain why do you think the managers at Artopex might prefer to use normal costing instead of Actual Costing?
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