TB MC Qu. 5-63 (Algo) Manufacturing overhead: Metal Company Metal Company budgeted $564,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead: Budgeted Level for Cost Driver Overhead Cost Pool Materials handling Machine setup Machine repair Inspections Budgeted Overhead Cost $164,000 14,400 1,800 15,000 Requirements for Job # 971 which manufactured 4 units of product: Direct labor Direct materials Machine setup Machine hours Inspections 20 hours 220 pounds 40 setups 15,900 machine hours 15 inspections 4,100 pounds 480 setups 30,000 machine hours. 250 inspections Overhead Cost Driver Weight of materials Number of setups Machine hours Number of inspections If Metal Company uses a volume-based overhead rate based on direct labor hours, the manufacturing overhead for Job # 971 is:
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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