Exercise 17-3 (Algo) Computing plantwide overhead rate LO P1 Dade Metals manufactures patio furniture. The company budgets overhead cost of $330,000 for the year. It also budgets 16,500 machine hours and 5,500 direct labor hours. 1. Compute the plantwide overhead rate, assuming the company allocates overhead based on (a) machine hours and (b) direct labor hours. 2a. Job 121 uses 180 machine hours and 120 direct labor hours. Allocate overhead to Job 121 assuming overhead is allocated based on machine hours. 2b. Job 121 uses 180 machine hours and 120 direct labor hours. Allocate overhead to Job 121 assuming overhead is allocated 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.
Exercise 17-3 (Algo) Computing plantwide overhead rate LO P1
Dade Metals manufactures patio furniture. The company budgets overhead cost of $330,000 for the year. It also budgets 16,500 machine hours and 5,500 direct labor hours.
1. Compute the plantwide overhead rate, assuming the company allocates overhead based on (a) machine hours and (b) direct labor hours.
2a. Job 121 uses 180 machine hours and 120 direct labor hours. Allocate overhead to Job 121 assuming overhead is allocated based on machine hours.
2b. Job 121 uses 180 machine hours and 120 direct labor hours. Allocate overhead to Job 121 assuming overhead is allocated based on direct labor hours.
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