At the beginning of the year, Smith Company budgeted overhead of $129,600 as well as 13,500direct labor hours. During the year, Job K456 was completed with the following information:direct materials cost, $2,750; direct labor cost, $5,355. The average wage for Smith Companyemployees is $17 per hour.By the end of the year, 18,100 direct labor hours had actually been worked, and Smith incurred the following actual overhead costs for the year:Equipment lease $ 6,800Depreciation on building 19,340Indirect labor 90,400Utilities 14,560Other overhead 41,400Required:1. Calculate the overhead rate for the year.2. Calculate the total cost of Job K456.3. Prepare the journal entries to record actual overhead and to apply overhead to productionfor the year.4. Is overhead overapplied or underapplied? By how much?5. Assuming that the normal cost of goods sold for the year is $635,600, what is the adjustedcost of goods sold?
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.
At the beginning of the year, Smith Company budgeted
direct labor hours. During the year, Job K456 was completed with the following information:
direct materials cost, $2,750; direct labor cost, $5,355. The average wage for Smith Company
employees is $17 per hour.
By the end of the year, 18,100 direct labor hours had actually been worked, and Smith incurred the following actual overhead costs for the year:
Equipment lease $ 6,800
Depreciation on building 19,340
Indirect labor 90,400
Utilities 14,560
Other overhead 41,400
Required:
1. Calculate the overhead rate for the year.
2. Calculate the total cost of Job K456.
3. Prepare the
for the year.
4. Is overhead overapplied or underapplied? By how much?
5. Assuming that the normal cost of goods sold for the year is $635,600, what is the adjusted
cost of goods sold?
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