The company incurred the following actual costs when it operated at 75% of capacity in October. Direct materials (46,000 pounds @ $6.20 per pound) Direct labor (23,000 hours @ $12.20 per hour) Overhead costs $285,200 280,600 Indirect materials Indirect labor Power Maintenance Depreciation-Building Depreciation-Machinery Taxes and insurance Supervisory salaries Total costs $ 41,550 176,950 17,250 34,500 25,000 97,200 14,400 279,250 686,100 $ 1,251,900
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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![Antuan Company set the following standard costs per unit for its product.
Direct materials (3.0 pounds @ $6.00 per pound)
Direct labor (1.9 hours @ $12.00 per hour)
Overhead (1.9 hours @ $18.50 per hour)
Standard cost per unit
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the
factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per
month at the 75% capacity level.
Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials
Indirect labor
Power
Maintenance
Total variable overhead costs
Fixed overhead costs
Depreciation-Building
Depreciation Machinery
Taxes and insurance
Supervisory salaries.
Total fixed overhead costs
Total overhead costs
$ 15,000
75,000
15,000
30,000
135,000
25,000
72,000
16,000
279, 250
$18.00
22.80
35.15
$75.95
392,250
$ 527,250](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d8aa6f5-4e5e-4ad7-8330-95db6ad61cd4%2F83bdc9b6-6524-40a4-87f2-c89e8bf0a1b4%2Fnx15nvs_processed.png&w=3840&q=75)
![The company incurred the following actual costs when it operated at 75% of capacity in October.
Direct materials (46,000 pounds @ $6.20 per pound)
Direct labor (23,000 hours @ $12.20 per hour)
Overhead costs
$285,200
280,600
Indirect materials
Indirect labor
Power
Maintenance
Depreciation-Building
Depreciation Machinery
Taxes and insurance
Supervisory salaries
Total costs
For Month Ended October 31
Production (in units)
Variable overhead costs
Fixed overhead costs
Total overhead costs
Flexible Overhead Budgets
Variable Amount Total Fixed
per Unit
Cost
$41,550
176,950
17,250
34,500
25,000
97,200
14,400
279,250
686,100
$ 1,251,900
Flexible Budget at Capacity Level of
65%
75%
85%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d8aa6f5-4e5e-4ad7-8330-95db6ad61cd4%2F83bdc9b6-6524-40a4-87f2-c89e8bf0a1b4%2Fb414z5a_processed.jpeg&w=3840&q=75)
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