Janicki Corporation has two manufacturing departments--Machining and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Machining Customizing Total Estimated total machine-hours (MHs) 1,000 9,000 10,000 Estimated total fixed manufacturing overhead cost $ 4,800 $ 23,400 $ 28,200 Estimated variable manufacturing overhead cost per MH $ 1.10 $ 2.50 During the most recent month, the company started and completed two jobs--Job A and Job J. There were no beginning inventories. Data concerning those two jobs follow: Job A Job J Direct materials $ 12,000 $ 7,700 Direct labor cost $ 20,700 $ 6,400 Machining machine-hours 700 300 Customizing machine-hours 3,600 5,400 Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices. The calculated selling price for Job J is closest to: $43,410 $65,115 $21,705 $67,720
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.
| Machining | Customizing | Total | ||||
| Estimated total machine-hours (MHs) | 1,000 | 9,000 | 10,000 | |||
| Estimated total fixed manufacturing overhead cost | $ | 4,800 | $ | 23,400 | $ | 28,200 |
| Estimated variable manufacturing overhead cost per MH | $ | 1.10 | $ | 2.50 |
During the most recent month, the company started and completed two jobs--Job A and Job J. There were no beginning inventories. Data concerning those two jobs follow:
| Job A | Job J | |||
| Direct materials | $ | 12,000 | $ | 7,700 |
| Direct labor cost | $ | 20,700 | $ | 6,400 |
| Machining machine-hours | 700 | 300 | ||
| Customizing machine-hours | 3,600 | 5,400 |
Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on
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$43,410
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$65,115
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$21,705
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$67,720
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