Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below is cost driver information used in the product-costing system: Overhead Cost Pool Budgeted Overhead Cost Driver Estimated Cost Driver Level Machine setups $ 120,000 # of setups 120 setups Materials handling 104,400 # of barrels 8,700 barrels Quality control 264,000 # of inspections 1,100 inspections Other overhead cost 144,000 # of machine hours 12,000 machine hours Total overhead $ 632,400 A current product order has the following requirements: Machine setups 8 setups Materials handling 606 barrels Quality inspections 80 inspections Machine hours 830 machine hours Direct labor hour 336 hours What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours?
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.
Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below is cost driver information used in the product-costing system:
| Budgeted Overhead | Cost Driver | Estimated Cost Driver Level | |||||
| Machine setups | $ | 120,000 | # of setups | 120 | setups | ||
| Materials handling | 104,400 | # of barrels | 8,700 | barrels | |||
| Quality control | 264,000 | # of inspections | 1,100 | inspections | |||
| Other overhead cost | 144,000 | # of machine hours | 12,000 | machine hours | |||
| Total overhead | $ | 632,400 | |||||
A current product order has the following requirements:
| Machine setups | 8 | setups |
| Materials handling | 606 | barrels |
| Quality inspections | 80 | inspections |
| Machine hours | 830 | machine hours |
| Direct labor hour | 336 | hours |
What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours?
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