RDX uses a Job Order Costing System to record production costs. Overheads are applied to each job on the basis of direct labour hours. Relevant information for 2015 is as follows: Estimated Labour Hours Estimated Factory Overheads Actual Expenses for January were: Direct Materials Used Direct Labour Incurred (4,300 hours) Indirect Labour & Materials Factory Utilities Equipment Depreciation Other overheads 55,000 hours $ 247,500 $ 78,000 $ 34,400 $ 5,800 $ 2,200 $ 4,000 $ 10,000 Required: a. Compute the pre-determined overhead application rate. b. Compute the amount of overheads applied to production for the month of January. c. Determine the over- or under-applied overhead for January.
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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