range Company has two departments, Stamping and Assembly. The company uses a job-order costing system and computes a redetermined overhead rate in each department. The Stamping Department bases its rate on machine-hours, and the Assembly epartment bases its rate on direct labour cost. At the beginning of the year, the company made the following estimates: Department Assembly 125,000 15,000 $2,550,000 $4,000,000 $ 360,000 $3, 200,000 Stamping 40,000 300,000 Direct labour-hours Machine-hours Manufacturing overhead cost Direct labour cost Pequired: Compute the predetermined overhead rate to be used in each department. (Round your stamping department answer to 2 ecimal places.) Stamping department per machine-hour nont Or Diroot lobe
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.
![Grange Company has two departments, Stamping and Assembly. The company uses a job-order costing system and computes a
predetermined overhead rate in each department. The Stamping Department bases its rate on machine-hours, and the Assembly
Department bases its rate on direct labour cost. At the beginning of the year, the company made the following estimates:
Department
Stamping
40,000
300,000
$2,550,000
$ 360,000 $3,200,000
Assembly
125,000
15,000
$4,000,000
Direct labour-hours
Machine-hours
Manufacturing overhead cost
Direct labour cost
Required:
1. Compute the predetermined overhead rate to be used in each department. (Round your stamping department answer to 2
decimal places.)
Stamping department
Assembly department
per machine-hour
% Direct labour cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04655fa1-8a14-4287-9748-c095e4183a84%2Fd7de7884-986c-49a6-87ec-8d9977edfd81%2Fbbqixyi_processed.png&w=3840&q=75)
![2. Assume that the overhead rates you computed in (1) above are in effect. The job cost sheet for Job 407, which was started and
completed during the year, shows the following:
Department
Stamping Assembly
Direct labour-hours
25
100
Machine-hours
450
20
$ 1,850
Materials requisitioned
Direct labour cost
$ 400
$ 250
800
Compute the total overhead cost applied to Job 407.
Total overhead cost
3. Would you expect substantially different amounts of overhead cost to be charged to some jobs if the company used a plantwide
overhead rate based on direct labour cost instead of using departmental rates?
O Yes](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F04655fa1-8a14-4287-9748-c095e4183a84%2Fd7de7884-986c-49a6-87ec-8d9977edfd81%2Flj162lq_processed.png&w=3840&q=75)
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