Overhead rates were based on normal monthly capacity of 6,000 machine hours. During November, the company produced only 850 units because of a labor strike which occurred during union contract negotiations. After the dispute was settled, the company scheduled overtime to try to meet regular production levels. The following costs were incurred in November: Material Aluminum 4,000 sheets purchased at $3.80; used 3,500 sheets Copper 3,000 sheets purchased at $8.40; used 2,600 sheets Direct Labor Regular time 5,200 hours at $16 (pre-contract settlement) Regular time 900 hours at $17 (post-contract settlement) Variable Overhead $23.300 (based on 4.175 machine hours)
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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