Manufacturing overhead rate (fabrication department) Manufacturing overhead rate (finishing department) Machine-hours (fabrication department) for May Direct manuf. labor-hours (finishing department) for May Work-in-process inventory, May 31 Finished-goods inventory, May 31 Cost of goods sold, May $12 per machine-hour S20 per direct manuf. labor-hour 3,200 machine-hours 1,800 labor-hours $60,000 $180,000 $360,000 Adventure Designs prorates under- and overallocated overhead monthly to work in process, finished goods, and cost of goods sold based on the ending balance in each account. 1. Calculate the amount of overhead allocated in the fabrication department and the finishing dep in May. 2. Calculate the amount of under- or overallocated overhead in each department and in total. 3. How much of the under- or overallocated overhead will be prorated to (a) work-in-process inventory, (b) finished-goods inventory, and (c) cost of goods sold based on the ending balance (before proration) in each of the three accounts? What will be the balance in work-in-process, finished-goods, and cost of goods sold after proration? 4. What would be the effect of writing off under- and overallocated overhead to cost of goods sold? Would it be reasonable for Adventure Designs to change to this simpler method? Required ment
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.
Proration of
overhead in the fabrication department is allocated to jobs on the basis of machine-hours and overhead in the nishing department is allocated to jobs based on direct manufacturing labor-hours. During May, Adventure Designs reported actual overhead of $42,600 in the fabrication department and $39,800 in the nishing department. Additional information follows:
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 14 images
