Sofía Gomez runs a mobile pet grooming service. She charges $25 direct labor per grooming hour. She applies overhead to jobs on the basis of grooming hours. She predicts 870 grooming hours for the year. Her estimated overhead costs for the year follow. Van depreciation Van maintenance $ 5,920 Van insurance expense 1,340 Indirect materials 1. Predetermined overhead rate 2. Total job cost 3. Price quote $ 1,070 Tool depreciation 670 Other overhead $ 420 1,020 1. Compute the predetermined overhead rate using estimated grooming hours. 2. Sofía has been asked to groom 3 large dogs. She expects this job to require a total of 15 direct labor grooming hours. Compute her total cost (direct labor plus applied overhead) for this job. 3. If Sofía targets a markup of 20% on the total cost for each job, what price should she quote for the job in part2?
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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