Crane Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,810,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,000, and 1819C, with total direct labour charges of $390,800. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $229,000, and for 1819C they amounted to $420,200. 905,000 Total charges to the Manufacturing Overhead Control account for the year were $902,500, and direct labour charges made to all jobs amounted to $1,582,600, representing 247,800 direct labour hours. There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory account showed a balance of $560,760. Sales for the year amounted to $6,205,300; cost of goods sold totalled $3,644,940; and sales, general, and administrative expenses were $1,850,700. (a) The above amounts for inventories and the cost of goods sold have not been adjusted for any over-or under-application of manufacturing overhead to production. It is the company's practice to allocate any over-or under-applied overhead to inventories and the cost of goods sold. Manufacturing overhead $ Calculate the under- or over-applied manufacturing overhead for 2022. +
Crane Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,810,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,000, and 1819C, with total direct labour charges of $390,800. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $229,000, and for 1819C they amounted to $420,200. 905,000 Total charges to the Manufacturing Overhead Control account for the year were $902,500, and direct labour charges made to all jobs amounted to $1,582,600, representing 247,800 direct labour hours. There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory account showed a balance of $560,760. Sales for the year amounted to $6,205,300; cost of goods sold totalled $3,644,940; and sales, general, and administrative expenses were $1,850,700. (a) The above amounts for inventories and the cost of goods sold have not been adjusted for any over-or under-application of manufacturing overhead to production. It is the company's practice to allocate any over-or under-applied overhead to inventories and the cost of goods sold. Manufacturing overhead $ Calculate the under- or over-applied manufacturing overhead for 2022. +
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:Crane Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies
manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by
forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows:
Direct labour
Manufacturing overhead
$1,810,000
As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,000, and 1819C, with
total direct labour charges of $390,800. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued
for 1768B amounted to $229,000, and for 1819C they amounted to $420,200.
905,000
Total charges to the Manufacturing Overhead Control account for the year were $902,500, and direct labour charges made to all jobs
amounted to $1,582,600, representing 247,800 direct labour hours.
There were no beginning inventories. In addition to the ending work in process just described, the ending finished goods inventory
account showed a balance of $560,760.
Sales for the year amounted to $6,205,300; cost of goods sold totalled $3,644,940; and sales, general, and administrative expenses
were $1,850,700.
(a)
The above amounts for inventories and the cost of goods sold have not been adjusted for any over-or under-application of
manufacturing overhead to production. It is the company's practice to allocate any over-or under-applied overhead to inventories and
the cost of goods sold.
Manufacturing overhead $
Calculate the under- or over-applied manufacturing overhead for 2022.
+
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