Manufacturing overhead costs incurred: Indirect materials $ 15,800 Indirect labor 138,000 Property taxes, factory 8,800 Utilities, factory 78,000 Depreciation, factory 150,600 Insurance, factory 10,800 Total actual manufacturing overhead costs incurred $ 402,000 Other costs incurred: Purchases of raw materials (both direct and indirect) $ 408,000 Direct labor cost $ 68,000 Inventories: Raw materials, beginning $ 20,800 Raw materials, ending $ 30,800 Work in process, beginning $ 40,800 Work in process, ending $ 70,800 The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,500 machine-hours were used during the year. 1. Compute the amount of underapplied or overapplied overhead cost for the year. 2. Prepare a schedule of cost of goods manufactured for the year.
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.
| Indirect materials | $ | 15,800 |
| Indirect labor | 138,000 | |
| Property taxes, factory | 8,800 | |
| Utilities, factory | 78,000 | |
| 150,600 | ||
| Insurance, factory | 10,800 | |
| Total actual manufacturing overhead costs incurred | $ | 402,000 |
| Other costs incurred: | ||
| Purchases of raw materials (both direct and indirect) | $ | 408,000 |
| Direct labor cost | $ | 68,000 |
| Inventories: | ||
| Raw materials, beginning | $ | 20,800 |
| Raw materials, ending | $ | 30,800 |
| Work in process, beginning | $ | 40,800 |
| Work in process, ending | $ | 70,800 |
The company uses a predetermined overhead rate of $20 per machine-hour to apply overhead cost to jobs. A total of 20,500 machine-hours were used during the year.
1. Compute the amount of underapplied or overapplied overhead cost for the year.
2. Prepare a schedule of cost of goods manufactured for the year.
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