The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, uses a job order costing system for its batch production processes. The St. Cloud plant has two departments through which most jobs pass. Plant-wide overhead, which includes the plant manager’s salary, accounting personnel, cafeteria, and human resources, is budgeted at $250,000. During the past year, actual plantwide overhead was $230,000. Each department’s overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the St. Cloud plant for the past year are as follows. Department A Department B Budgeted department overhead (excludes plantwide overhead) $ 108,000 $ 329,000 Actual department overhead 120,000 344,000 Expected total activity: Direct labor hours 44,000 10,000 Machine-hours 18,000 47,000 Actual activity: Direct labor hours 45,500 9,500 Machine-hours 18,500 49,000 For the coming year, the accountants at the St. Cloud plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining only to job no. 110 are as follows. Direct materials $ 18,500 Direct labor cost: Department A (2,200 hr) 33,000 Department B (1,200 hr) 6,800 Machine-hours projected: Department A 110 Department B 1,200 Units produced 14,000 d. Compute the under- or overapplied overhead for the St. Cloud plant for the year
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 Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, uses a
| Department A | Department B | ||||||
| Budgeted department overhead | |||||||
| (excludes plantwide overhead) | $ | 108,000 | $ | 329,000 | |||
| Actual department overhead | 120,000 | 344,000 | |||||
| Expected total activity: | |||||||
| Direct labor hours | 44,000 | 10,000 | |||||
| Machine-hours | 18,000 | 47,000 | |||||
| Actual activity: | |||||||
| Direct labor hours | 45,500 | 9,500 | |||||
| Machine-hours | 18,500 | 49,000 | |||||
For the coming year, the accountants at the St. Cloud plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining only to job no. 110 are as follows.
| Direct materials | $ | 18,500 | |
| Direct labor cost: | |||
| Department A (2,200 hr) | 33,000 | ||
| Department B (1,200 hr) | 6,800 | ||
| Machine-hours projected: | |||
| Department A | 110 | ||
| Department B | 1,200 | ||
| Units produced | 14,000 | ||
d. Compute the under- or overapplied overhead for the St. Cloud plant for the year
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