Stuart, Inc. estimates manufacturing overhead costs for the Year 3 accounting period as follows. Equipment depreciation $ 191,000 Supplies 20,000 Materials handling 33,400 Property taxes 14,800 Production setup 19,800 Rent 45,000 Maintenance 39,300 Supervisory salaries 315,100 The company uses a predetermined overhead rate based on machine hours. Estimated hours for labor in Year 3 were 215,000 and for machines were 128,000. Required Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.) Determine the amount of manufacturing overhead applied to Work in Process Inventory during the Year 3 period if actual machine hours were 143,000. (Do not round intermediate calculations.)
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.
Exercise 11-4A (Algo) Calculating applied overhead LO 11-2
Stuart, Inc. estimates
| Equipment |
$ | 191,000 | |
| Supplies | 20,000 | ||
| Materials handling | 33,400 | ||
| Property taxes | 14,800 | ||
| Production setup | 19,800 | ||
| Rent | 45,000 | ||
| Maintenance | 39,300 | ||
| Supervisory salaries | 315,100 | ||
The company uses a predetermined overhead rate based on machine hours. Estimated hours for labor in Year 3 were 215,000 and for machines were 128,000.
Required
-
Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)
-
Determine the amount of manufacturing overhead applied to Work in Process Inventory during the Year 3 period if actual machine hours were 143,000. (Do not round intermediate calculations.)
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