Surething Corporation estimates that direct labour-hours will be 15,000, direct machine-hours will be 6,000, and indirect manufacturing costs (costs that will be impossible or difficult to trace to a particular job or process) will total $270,000. The company uses a predetermined overhead rate of $18 per direct labour-hour. The company incurred actual total manufacturing overhead costs of $230,000 and 12,500 total direct labour-hours during the period. Rounding all calculations to two decimal places: a) Compute the amount of manufacturing overhead applied to units of product during the period b) Compute the amount of over- or underapplied overhead for the period c) Prepare the journal entry to dispose of the over- or underapplied overhead
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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