Chisels Company produces "collapse-proof" rod and reel cases. In preparing the current budget for the year, Chisels estimates a total of $400,000 in direct materials cost, $300,000 in direct labor cost, and $300,000 in manufacturing overhead costs. Since the manufacturing process is highly automated, the company uses machine hours as the overhead application base. Estimated machine hours total 12,000. At the end of the period, Chisels reported actual results as follows: direct materials cost of $410,000, direct labor cost of $250,000, manufacturing overhead cost $310,000, and machine hours used 12,500. Required: What is Chisels's predetermined overhead rate for the year? How much manufacturing overhead did Chisels apply to jobs during the year? If over- or underapplied overhead is closed to Cost of Goods Sold, what is the balance in the Manufacturing Overhead account after the adjustment? a. b. C
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.
Jm. 158.
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