Problem 7 Madelyn Company manufactures unique, custom-made furniture. The company uses a job order system and applies overhead to production on the basis of direct labor cOst. In computing a predetermined overhead rate for the year 2019, the company estimated manufacturing overhead to be P26 million and direct labor costs to be P20 million. Actual costs incurred during 2019 Direct materials used Direct labor cost incurred Insurance - factory equipment Indirect labor Factory maintenance Rent - factory building Depreciation - factory equipment P 30,000.000 18,000,000 500,000 7,500,000 2,000,000 11,000,000 2,000,000
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.
Problem 7 - Madelyn Company manufactures unique, custom-made furniture. The company uses a job order system and applies
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