Goodmark Company produces two types of birthday cards: scented and regular. During the year, 20,000 scented cards and 200,000 regular cards were produced. Goodmark has two production departments: Cutting and Printing. Direct labor hours are used to assign the overhead of Cutting and machine hours are used for Printing. The data for the two producing departments are given below: Cutting Printing Total Direct labor hours: Scented 10,000 10,000 20,000 Regular 150,000 10,000 160,000 Total 160,000 20,000 180,000 Machine hours: Scented 2,000 8,000 10,000 Regular 8,000 72,000 80,000 10,000 80,000 90,000 Overhead costs $216,000 $504,000 $720,000 Required: 1. Calculate the overhead rates for each department (round to the nearest cent): Cutting: per direct labor hour Printing: per machine hour 2. Calculate the overhead cost per unit (round to the nearest cent): Scented: Regular:
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.
Cornerstones of Cost Management 4th Ed - Chapter 4
Scenario III: Goodmark Company produces two types of birthday cards: scented and regular. During the year, 20,000 scented cards and 200,000 regular cards were produced. Goodmark has two production departments: Cutting and Printing. Direct labor hours are used to assign the
| Cutting | Printing | Total | |||
| Direct labor hours: | |||||
| Scented | 10,000 | 10,000 | 20,000 | ||
| Regular | 150,000 | 10,000 | 160,000 | ||
| Total | 160,000 | 20,000 | 180,000 | ||
| Machine hours: | |||||
| Scented | 2,000 | 8,000 | 10,000 | ||
| Regular | 8,000 | 72,000 | 80,000 | ||
| 10,000 | 80,000 | 90,000 | |||
| Overhead costs | $216,000 | $504,000 | $720,000 |
Required:
| 1. | Calculate the overhead rates for each department (round to the nearest cent): | ||||||
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| 2. | Calculate the overhead cost per unit (round to the nearest cent): | ||||||
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