Gergia Woods Inc manufactures furniture to customers specifications and uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Dept one, overhead is applied on the basis of machine hours, in department two, on the basis of direct labor hours Dept 1 Dept 2 Direct Labor Cost $300000 $225000 Direct Labor hours 20000 15000 Manufacturing Overhead $420000 $337500 Machine Hours 12000 7500 Production of a batch of custome furniture ordered by City Furniture (job no.58) was started early in the year and completed 3 weeks later oin Jan 29. The records for thisjob show the following cost information. Dept 1 Dept 2 Job order City Furniture Direct Materials cost $10100 $7600 Direct Labor Cost $16,500 $11,100 Direct Labor hours 1100 740 Machine hours 750 500 Selected additional information for January as follows: Dept 1 Dept 2 Direct Labor Hours-month of January 1600 1200 Machine hours -month of January 1100 600 Manufacturing overhead incurred in January $39,010 $26,540 a. Compute the predetermined overhead rate for each department b. What is the total cost of the furniture produced for City Furniture c. Prepare the entries required to record the sale (on account) of the furniture to City Furniture. The sales price of theorder was $147,000 d. determine the over or underapplied overhead for each department at the end of January
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.
Gergia Woods Inc manufactures furniture to customers specifications and uses
| Dept 1 | Dept 2 | |
| Direct Labor Cost | $300000 | $225000 |
| Direct Labor hours | 20000 | 15000 |
| Manufacturing Overhead | $420000 | $337500 |
| Machine Hours | 12000 | 7500 |
Production of a batch of custome furniture ordered by City Furniture (job no.58) was started early in the year and completed 3 weeks later oin Jan 29. The records for thisjob show the following cost information.
| Dept 1 | Dept 2 | |
| Job order City Furniture | ||
| Direct Materials cost | $10100 | $7600 |
| Direct Labor Cost | $16,500 | $11,100 |
| Direct Labor hours | 1100 | 740 |
| Machine hours | 750 | 500 |
Selected additional information for January as follows:
| Dept 1 | Dept 2 | |
| Direct Labor Hours-month of January | 1600 | 1200 |
| Machine hours -month of January | 1100 | 600 |
| Manufacturing overhead incurred in January | $39,010 | $26,540 |
a. Compute the predetermined overhead rate for each department
b. What is the total cost of the furniture produced for City Furniture
c. Prepare the entries required to record the sale (on account) of the furniture to City Furniture. The sales price of theorder was $147,000
d. determine the over or underapplied overhead for each department at the end of January
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