Specter Company uses a job order cost system and applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labour-hours. Last year manufacturing overhead and direct labour-hours were estimated at $50,000 and 20,000 hours, respectively, for the year. In June, Job # 461 was completed. Materials costs on the job totaled $4,000 and direct labour costs totaled $1.500 at $5 per hour. At the end of the year, it was determined that the company worked 24,000 direct labour hours for the year and incurred $54,000 in actual manufacturing overhead costs. Required: (You must show all calculations for each part.) Calculate the total cost of Job # 461. a) b) If Job #461 consisted of 100 units what is the cost per unit? What is the underapplied or overapplied overhead for the year?
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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