Question 1: Moody Corporation uses a job-order costing system with a plantwide overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production . . . . . . 100,000 Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . $650,000 Variable manufacturing overhead cost per machine-hour . . . . . . . $3.00 Required: 1. Compute the predetermined overhead rate. 2. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials requisitioned . . . . . . . . . . . . . . . . . . . . . . . . . . . . $450 Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210 Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Compute the total manufacturing cost assigned to Job 400. 3. During the year, the company worked a total of 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,350,000. What is the amount of underapplied or overapplied overhead for the year? If this amount were closed out entirely to Cost of Goods Sold would the journal entry increase or decrease net operating income?
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.
Question 1:
Moody Corporation uses a
Machine-hours required to support estimated production . . . . . . 100,000
Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . $650,000
Variable manufacturing overhead cost per machine-hour . . . . . . . $3.00
Required:
- 1. Compute the predetermined overhead rate.
- 2. During the year, Job 400 was started and completed. The following information was available with respect to this job:
Direct materials requisitioned . . . . . . . . . . . . . . . . . . . . . . . . . . . . $450
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210
Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Compute the total
- 3. During the year, the company worked a total of 146,000 machine-hours on all jobs and incurred actual manufacturing overhead costs of $1,350,000. What is the amount of underapplied or overapplied overhead for the year? If this amount were closed out entirely to Cost of Goods Sold would the
journal entry increase or decrease net operating income?
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