Red River Farm Machine makes a wide variety of products, all of which must be processed in the Cutting and Assembly departments. For the year, Red River budgeted total overhead of $1,390,200, of which $539,700 will be incurred in Cutting and the remainder will be incurred in Assembly. Budgeted direct labor and machine hours are as follows: Two products made by Red River are the RW22SKI and the SD45ROW. The following cost and production time information on these items has been gathered: b. What are the departmental predetermined OH rates in Cutting and Assembly using the most appropriate base in each department? 1. OH rate in Cutting: $______ per DLH 2. OH rate in Assembly: $______ per MH
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.
Red River Farm Machine makes a wide variety of products, all of which must be processed in the Cutting and Assembly departments. For the year, Red River budgeted total overhead of $1,390,200, of which $539,700 will be incurred in Cutting and the remainder will be incurred in Assembly. Budgeted direct labor and machine hours are as follows:
Two products made by Red River are the RW22SKI and the SD45ROW. The following cost and production time information on these items has been gathered:
b. What are the departmental predetermined OH rates in Cutting and Assembly using the most appropriate base in each department?
1. OH rate in Cutting: $______ per DLH
2. OH rate in Assembly: $______ per MH
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