Norwall Company’s variable manufacturing overhead should be $3.00 per standard machine-hour and itsfixed manufacturing overhead should be $300,000 per period.The following information is available for a recent period:a. The denominator activity of 60,000 machine-hours is used to compute the predetermined overhead rate.b. At the 60,000 standard machine-hours level of activity, the company should produce 40,000 unitsof product.c. The company’s actual operating results were:Number of units produced .................................... 42,000Actual machine-hours ........................................... 64,000Actual variable overhead cost .............................. $185,600Actual fixed overhead cost ................................... $302,400Required:1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.2. Compute the standard hours allowed for the actual production.3. Compute the variable overhead rate and efficiency variances and the fixed overhead budget andvolume variances.
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.
Norwall Company’s variable manufacturing
fixed manufacturing overhead should be $300,000 per period.
The following information is available for a recent period:
a. The denominator activity of 60,000 machine-hours is used to compute the predetermined overhead rate.
b. At the 60,000 standard machine-hours level of activity, the company should produce 40,000 units
of product.
c. The company’s actual operating results were:
Number of units produced .................................... 42,000
Actual machine-hours ........................................... 64,000
Actual variable overhead cost .............................. $185,600
Actual fixed overhead cost ................................... $302,400
Required:
1. Compute the predetermined overhead rate and break it down into variable and fixed cost elements.
2. Compute the standard hours allowed for the actual production.
3. Compute the variable overhead rate and efficiency variances and the fixed overhead budget and
volume variances.
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