For a small manufacturing firm, a current-period job that requires 35 hours of direct labor is to be allocated $437.50 of overhead cost based on a rate developed from previous-period data. The following additional information is available: Overhead is allocated based on direct labor hours. One thousand direct labor hours were expended in the previous period. The previous period’s average labor rate was $10/hour. The current period’s average labor rate is $10/hour. Solve, a. What were the overhead costs for the previous period? b. If overhead for the job in question had been allocated based on direct labor dollars, how much overhead cost would have been allocated? (If you did not get an answer to part a, you may assume a value of $15,000 for previous-period overhead costs.)
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.
For a small manufacturing firm, a current-period job that requires 35 hours of direct labor is to be allocated $437.50 of
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