DEF Co. uses a job costing system. Normal costing is used and factory overhead is applied on the basis of machine hours. At the beginning of the year, management estimated that the company would incur P1,007,500 of factory overhead costs and use 77,500 machine-hours. DEF Co. recorded the following events during the month of April: a) Purchased 180,000 pounds of materials on account; the cost was P2.50 per pound. b) Issued120,000 pounds of materials to production. Of this amount, 15,000 pounds were used as indirect materials. c) Direct labor costs incurred was P240,000 and indirect labor costs incurred were P50,000. d) Depreciation on equipment for the month amounted to P15,700. e) Insurance costs were P3,500 for the manufacturing property f) Paid 8,500 cash for utilities and other miscellaneous items for the manufacturing plant. g) Ob E5 costing P6,500 and Job F4 costing P77,00 were completed during the month and transferred to the Finished Goods account. h) Job F4 was shipped to the customer during the month. The job was invoiced at 35 percent above cost. i) During April, 7,800 machine hours were used.
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.
![DEF Co. uses a job costing system. Normal costing is used and factory overhead is
applied on the basis of machine hours. At the beginning of the year, management
estimated that the company would incur P1,007,500 of factory overhead costs and use
77,500 machine-hours.
DEF Co. recorded the following events during the month of April:
a) Purchased 180,000 pounds of materials on account; the cost was P2.50 per pound.
b) Issued120,000 pounds of materials to production. Of this amount, 15,000 pounds
were used as indirect materials.
c) Direct labor costs incurred was P240,000 and indirect labor costs incurred were
P50,000.
d) Depreciation on equipment for the month amounted to P15,700.
e) Insurance costs were P3,500 for the manufacturing property
f) Paid 8,500 cash for utilities and other miscellaneous items for the manufacturing
plant.
g) Ob E5 costing P6,500 and Job F4 costing P77,00 were completed during the
month and transferred to the Finished Goods account.
h) Job F4 was shipped to the customer during the month. The job was invoiced at 35
percent above cost.
i) During April, 7,800 machine hours were used.
3. The company's overhead rate for the year is
a. P16 per machine hours
b. P25 per machine hours
c. P10 per machine hours
d. P13 per machine hours
4. The amount of overapplied or underapplied overhead on April 30 is
a. P13,800 underapplied
b. P13,800 overapplied
c. P12,500 underapplied
d. P12,500 overapplied](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F030a19fc-d9d1-45d7-b53a-84e2da6a55e7%2F7fe4c124-120e-4151-a0c1-43f823767539%2Fnqytyf_processed.png&w=3840&q=75)
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