Seco, Inc., produces two types of clothes dryers: deluxe and regular. Seco uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year: Estimated overhead $2,000,000 Expected activity 50,000 Actual activity (direct labor hours): Deluxe dryer 10,000 Regular dryer 40,000 Units produced: Deluxe dryer 20,000 Regular dryer 200,000 Required: 1. Calculate the predetermined plantwide overhead rate, using direct labor hours. $ per hour??? Calculate the applied overhead for each product, using direct labor hours. Applied overhead Deluxe $?? Regular $?? 2. Calculate the overhead cost per unit for each product. Overhead Cost Deluxe $ per unit?? Regular $ per unit?? 3. What if the deluxe product used 20,000 hours (to produce 20,000 units) instead of 10,000 hours (total expected hours remain the same)? Calculate the effect on the profitability of this product line if all 20,000 units are sold. Profits would decrease by $
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.
Seco, Inc., produces two types of clothes dryers: deluxe and regular. Seco uses a plantwide rate based on direct labor hours to assign its
| Estimated overhead | $2,000,000 |
| Expected activity | 50,000 |
| Actual activity (direct labor hours): | |
| Deluxe dryer | 10,000 |
| Regular dryer | 40,000 |
| Units produced: | |
| Deluxe dryer | 20,000 |
| Regular dryer | 200,000 |
Required:
1. Calculate the predetermined plantwide overhead rate, using direct labor hours.
$ per hour???
Calculate the applied overhead for each product, using direct labor hours.
| Applied overhead | |
| Deluxe | $?? |
| Regular | $?? |
2. Calculate the overhead cost per unit for each product.
| Overhead Cost | |
| Deluxe | $ per unit?? |
| Regular | $ per unit?? |
3. What if the deluxe product used 20,000 hours (to produce 20,000 units) instead of 10,000 hours (total expected hours remain the same)? Calculate the effect on the profitability of this product line if all 20,000 units are sold.
Profits would decrease by $
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