Identifiable and allocated overhead Reallocation of service departments: Dept. 1 Factory floor space Dept. 2 Number of factory workers Total manufacturing overhead What is the apparent overhead rate for each production department if planned direct labor hours are the overhead application base?
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.
Service Department Cost Allocation
Presented below are certain operating data for the four departments of Tally Manufacturing Company.
| Service | Production | |||
|---|---|---|---|---|
| 1 | 2 | 1 | 2 | |
| Total |
$120,000 | $144,000 | $180,000 | $196,000 |
| Square feet of factory floor space | 80,000 | 160,000 | ||
| Number of factory workers | 60 | 20 | ||
| Planned direct labor hours for the year | 40,000 | 60,000 |
Allocate, to the two production departments, the costs of service departments 1 and 2, using factory floor space and number of workers, respectively, as bases. Do not round bases when calculating reallocations of service departments.
| Production | ||
|---|---|---|
| 1 | 2 | |
| Identifiable and allocated overhead | ||
| Reallocation of service departments: | ||
| Dept. 1 Factory floor space | ||
| Dept. 2 Number of factory workers | ||
| Total manufacturing overhead |
What is the apparent overhead rate for each production department if planned direct labor hours are the overhead application base?
Round answers to two decimal places, when a
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