Parker Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, manufacturing overhead and direct labor-hours for the year were estimated at RM50,000 and 20,000 hours, respectively. In June, Job #461 was completed. Materials costs on the job totaled RM4,000 and labor costs totaled RM1,500 at RM5 per hour. At the end of the year it was determined that the company worked 24,000 direct labor-hours for the year and incurred RM54,000 in actual manufacturing overhead costs. REQUIRED: If Job #461 contained 100 units, compute the unit cost on the completed job cost sheet. Determine whether manufacturing overhead costs was under/over-applied 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.
- Parker Company has a job-order costing system and uses a predetermined
overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year, manufacturing overhead and direct labor-hours for the year were estimated at RM50,000 and 20,000 hours, respectively. In June, Job #461 was completed. Materials costs on the job totaled RM4,000 and labor costs totaled RM1,500 at RM5 per hour. At the end of the year it was determined that the company worked 24,000 direct labor-hours for the year and incurred RM54,000 in actualmanufacturing overhead costs .
REQUIRED:
- If Job #461 contained 100 units, compute the unit cost on the completed
job cost sheet. - Determine whether manufacturing overhead costs was under/over-applied for the year.
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