E3-20A Compute a predetermined overhead rate and calculate cost of jobs based on direct labor hours (Learning Objectives 3 & 4) Elkland Heating & Cooling installs and services commercial heating and cooling systems. Elkland uses job costing to calculate the cost of its jobs. Overhead is allocated to each job based on the number of direct labor hours spent on that job. At the beginning of the current year, Elkland estimated that its overhead for the coming year would be $61,500. It also anticipated using 4,100 direct labor hours for the year. In November, Elkland started and completed the following two jobs: Job 102 Direct materials used. $10,000 Direct labor hours used 72 Elkland paid a $24-per-hour wage rate to the employees who worked on these two Job 101 $15,000 155
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.
Step by step
Solved in 5 steps
