Assembly Department Packaging Department Total Overhead costs $ 456,500 $ 264,500 $ 721,000 Machine hours: Basic Model 185,000 MHr 45,000 MHr 230,000 MHr Professional Model 230,000 MHr 55,000 MHr 285,000 MHr Total 415,000 MHr 100,000 MHr 515,000 MHr Direct labor hours: Basic Model 20,000 DLHR 50,000 DLHR 70,000 DLHR Professional Model 105,125 DLHr 280,625 DLHr 385,750 DLH. Total 125,125 DLHR 330,625 DLHR 455,750 DLHr
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.
Computing and using departmental
Koehler (see Exercise E1945) makes handheld calculators in two models—basic and Professional—and wants to refine its costing system by allocating overhead using departmental rates. The estimated $721,000 of manufacturing overhead has been divided into two cost pools: Assembly Department and Packaging Department. The following data have been compiled:
Compute the predetermined overhead allocation rates using machine hours as the allocation base for the Assembly Department and direct labor hours for the Packaging Department. How much overhead is allocated to the basic model? To the professional model? Round allocation rates to two decimal places and allocated costs to whole dollars
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