The following information for the past year is available from Gas Company, a company that uses machine hours to apply standard factory overhead cost to outputs: Actual total factory overhead cost incurred $ 31,000 Actual fixed overhead cost incurred $ 12,000 Budgeted fixed overhead cost $ 14,000 Actual machine hours 4,000 Standard machine hours allowed for the units manufactured 5,200 Denominator volume—machine hours 4,500 Standard variable overhead rate per machine hour $ 3 The standard fixed overhead application rate, to two (2) decimal places, is: A. $5.11 per machine hour B. $2.11 per machine hour C. $4.11 per machine hour D. $3.11 per machine hour E. $6.11 per machine hour
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.
The following information for the past year is available from Gas Company, a company that uses machine hours to apply standard
| Actual total factory overhead cost incurred | $ 31,000 |
|---|---|
| Actual fixed overhead cost incurred | $ 12,000 |
| Budgeted fixed overhead cost | $ 14,000 |
| Actual machine hours | 4,000 |
| Standard machine hours allowed for the units manufactured | 5,200 |
| Denominator volume—machine hours | 4,500 |
| Standard variable overhead rate per machine hour | $ 3 |
The standard fixed overhead application rate, to two (2) decimal places, is:
A. $5.11 per machine hour
B. $2.11 per machine hour
C. $4.11 per machine hour
D. $3.11 per machine hour
E. $6.11 per machine hour
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