Exercise 7-31 (Static) Predetermined Overhead Rates (LO 7-2) Sturgis Manufacturing produces one model of precision tool and accounts for costs using a job cost system. Information from the most recent fiscal year indicates the following: • Total manufacturing cost during the year was $2,578,125 based on actual direct materials, actual direct labor, and applied manufacturing overhead. Of this amount, 40 percent was comprised of direct costs • Manufacturing overhead was applied to work in process at 250 percent of direct materials dollars. Required: Compute actual direct materials used, actual direct labor, and applied manufacturing overhead Answer is complete but not entirely correct. $ 441,964 $ 1,031,250 $ 1,104,911 c Direct materials used Direct labor Manufacturing overhead applied
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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