Problem 7-52 (Algo) Predetermined Rates, Prorate Over- or Underapplied Overhead (LO 7-3) Bromley Custom Cabinetry (BCC) uses a job costing system and applies overhead based on direct materials cost. Last year, manufacturing overhead was expected to be $721,600 and direct materials cost was estimated to be $656,000. Actual manufacturing overhead amounted to $721,600, as estimated, and actual direct materials cost was $625,000. BCC allocates any over- or underapplied overhead to three accounts-Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold-based on the balances in those accounts. At the end of the year, the total amount in the three accounts (Work-in- Process Inventory, Finished Goods Inventory, and Cost of Goods Sold) was $2 million before any allocation. As a part of the process, you learn that BCC allocated $30,008 to Cost of Goods Sold. Required: What will Bromley report as Cost of Goods Sold for the year? Note: Do not round intermediate calculations. Enter your answer in dollars, rather than in millions of dollars. Cost of goods sold
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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