MontanaTechnology, Inc. has a job-order costing system. The company uses pre- determined overhead rates in applying manufacturing overhead cost to individual jobs. The pre-determined overhead rate in Department A is based on machine hours, and the rate in Department B is based on direct materials cost. At the beginning of the most recent year, the company's management made the following estimates for the year. 70,000 30,000 $195,000 $260,000 $420,000 Department B 19,000 60,000 $282,000 $520,000 $705,000 Machine-hours Direct labour-hours Direct materials cost Direct labour cost Manufacturing overhead cost Job 243 entered into production on April 1 and was completed on May 12. The company's cost records show the following information about the job: Department A 250 70 B 60 Machine-hours Direct labour-hours 120 $840 $610 $1,100 $880 Direct materials cost Direct labour cost At the end of the year, the records of Montana showed the following actual cost and operating data for all jobs worked on during the year. Department B 20,000 Machine-hours Direct labour-hours Direct materials cost 61,000 28,000 $156,000 $385,000 66,000 $284,000 $705,000 Manufacturing overhead cost a. Compute the pre-determined overhead rates for Department A and Department B b. Compute the total overhead cost applied to Job 243 c. Computer the amount of under-applied or over-applied overhead in each department at the end of the current vear
MontanaTechnology, Inc. has a job-order costing system. The company uses pre- determined overhead rates in applying manufacturing overhead cost to individual jobs. The pre-determined overhead rate in Department A is based on machine hours, and the rate in Department B is based on direct materials cost. At the beginning of the most recent year, the company's management made the following estimates for the year. 70,000 30,000 $195,000 $260,000 $420,000 Department B 19,000 60,000 $282,000 $520,000 $705,000 Machine-hours Direct labour-hours Direct materials cost Direct labour cost Manufacturing overhead cost Job 243 entered into production on April 1 and was completed on May 12. The company's cost records show the following information about the job: Department A 250 70 B 60 Machine-hours Direct labour-hours 120 $840 $610 $1,100 $880 Direct materials cost Direct labour cost At the end of the year, the records of Montana showed the following actual cost and operating data for all jobs worked on during the year. Department B 20,000 Machine-hours Direct labour-hours Direct materials cost 61,000 28,000 $156,000 $385,000 66,000 $284,000 $705,000 Manufacturing overhead cost a. Compute the pre-determined overhead rates for Department A and Department B b. Compute the total overhead cost applied to Job 243 c. Computer the amount of under-applied or over-applied overhead in each department at the end of the current vear
Chapter1: Financial Statements And Business Decisions
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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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Transcribed Image Text:MontanaTechnology, Inc. has a job-order costing system. The company uses pre-
determined overhead rates in applying manufacturing overhead cost to individual jobs.
The pre-determined overhead rate in Department A is based on machine hours, and the
rate in Department B is based on direct materials cost. At the beginning of the most
recent year, the company's management made the following estimates for the year:
Department
B
19,000
60,000
$282,000
$520,000
$705,000
Machine-hours
70,000
30,000
$195,000
$260,000
$420,000
Direct labour-hours
Direct materials cost
Direct labour cost
Manufacturing overhead cost
Job 243 entered into production on April 1 and was completed on May 12. The
company's cost records show the following information about the job:
Department
A
250
B
60
Machine-hours
Direct labour-hours
70
120
$840
$610
$1,100
$880
Direct materials cost
Direct labour cost
At the end of the year, the records of Montana showed the following actual cost and
operating data for all jobs worked on during the year.
Department
A
61,000
28,000
$156,000
$385,000
B
20,000
66,000
$284,000
$705,000
Machine-hours
Direct labour-hours
Direct materials cost
Manufacturing overhead cost
a. Compute the pre-determined overhead rates for Department A and Department B
b. Compute the total overhead cost applied to Job 243
c. Computer the amount of under-applied or over-applied overhead in each department
at the end of the current year
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