Housholder Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from the beginning of the year $ 310,000 Estimated activity level from the beginning of the year 20,000 machine-hours Actual total fixed manufacturing overhead $ 338,000 Actual activity level 18,300 machine-hours
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.
| Estimated total fixed manufacturing overhead from the beginning of the year |
$ | 310,000 | |
| Estimated activity level from the beginning of the year | 20,000 | machine-hours | |
| Actual total fixed manufacturing overhead | $ | 338,000 | |
| Actual activity level | 18,300 | machine-hours |
The predetermined overhead rate is closest to:
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$15.50
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$18.47
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$16.90
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$16.94
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