Happy Clicks Inc. uses a predetermined overhead allocation rate of $4.75 per machine hour. Actual overhead costs incurred during the year are as follows: Indirect materials $5,200 Indirect labor $3,750 Plant depreciation $4,800 Plant utilities and insurance $9,530 Other plant overhead costs $12,700 Total machine hours used during the year 7,520 hours What is the amount of manufacturing overhead cost allocated to Work-in-Process Inventory during the year? Is the manufacturing overhead account under or over-allocated and if so by how much? Journalize the under or over allocation.
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.
Happy Clicks Inc. uses a predetermined
|
Indirect materials |
$5,200 |
|
Indirect labor |
$3,750 |
|
Plant |
$4,800 |
|
Plant utilities and insurance |
$9,530 |
|
Other plant overhead costs |
$12,700 |
|
Total machine hours used during the year |
7,520 hours |
What is the amount of
Is the manufacturing overhead account under or over-allocated and if so by how much?
Journalize the under or over allocation.
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