Carrothers Company estimates that total factory overhead costs will be $960,000 for the year. Direct labor hours are estimated to be 80,000. a. For Carrothers Company, determine the predetermined factory overhead rate using direct labor hours as the activity base. b. During August, Carrothers Company accumulated 4,300 hours of direct labor costs on Job 50 and 5,100 hours on Job 56. Determine the amount of factory overhead applied to Jobs 50 and 56 in August. c. Journalize the entry to apply factory overhead to both jobs in August according to the predetermined overhead rate. If an amount box does not require an entry, leave it blank.
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.
Applying Factory
Carrothers Company estimates that total
a. For Carrothers Company, determine the predetermined factory overhead rate using direct labor hours as the activity base.
b. During August, Carrothers Company accumulated 4,300 hours of direct labor costs on Job 50 and 5,100 hours on Job 56. Determine the amount of factory overhead applied to Jobs 50 and 56 in August.
c.
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