Karvel Corporation uses machine hours as the basis for allocating manufacturing overhead costs to production. For the month of August, Karvel estimated total manufacturing overhead costs at GH¢300,000 and total machine hours at 75,000 hours. Actual results for the period were total manufacturing overhead costs of GH¢290,000 and total machine hours of 75,000 hours. As a result of this outcome, Karvel would have A. applied more overhead to Work in Process than the actual amount of overhead cost for the year. B. applied less overhead to Work in Process than the actual amount of overhead cost for the year. C. applied an amount of overhead to Work in Process that was equal to the actual amount of overhead. D. found it necessary to recalculate the predetermined overhead rate.
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.
Karvel Corporation uses machine hours as the basis for allocating
A. applied more overhead to Work in Process than the actual amount of overhead cost for the year.
B. applied less overhead to Work in Process than the actual amount of overhead cost for the year.
C. applied an amount of overhead to Work in Process that was equal to the actual amount of overhead.
D. found it necessary to recalculate the predetermined overhead rate.
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