The chief cost accountant for Voltaire Beverage Co. estimated that total factory overhead cost for the Blending Department for the coming fiscal year beginning May 1 would be $130,000 and total direct labor costs would be $100,000. During May, the actual direct labor cost totaled $13,000 and factory overhead cost incurred totaled $17,350. Required: a. What is the predetermined factory overhead rate based on direct labor cost? On May 31, journalize the entry to apply factory overhead to production. Refer to the chart of accounts for the exact wording of the account titles. . b. What is the May 31 balance of the account Factory Overhead-Blending Department? Does the balance in part c represent over- or underapplied factory 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.
| a. | What is the predetermined factory overhead rate based on direct labor cost? |
| On May 31, |
|
| b. | What is the May 31 balance of the account Factory Overhead-Blending Department? |
| Does the balance in part c represent over- or underapplied factory overhead? |
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