Linwood Company uses a job order costing system and a predetermined overhead rate based on machine hours. At the beginning of the year, the company estimated manufacturing overhead for the year would be $60 000 and 12 000 machine hours would be used. The following information relates to February this year, when three jobs were in process: Job 5 $ 4 000 Job 6 $6 500 Job 8 $9 500 Work in process, February 1 February production activity: Materials requisitioned Direct labour costs Machine hours $1.000 $600 200 $1 200 $900 350 Actual manufacturing overhead costs incurred in February were $6 000. Required: $1 800 $1.000 450 a. Compute the predetermined overhead application rate. b. Determine the total cost associated with Job 6 at the end of February.
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.
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