The predetermined overhead rate for Foster, Incorporated is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were: Direct materials $ 240,000 Direct labor 410,000 Indirect materials 55,000 Indirect labor 125,000 Sales commissions 55,000 Factory depreciation 170,000 Property taxes, factory 15,000 Factory utilities 35,000 Advertising 62,500 Factory equipment rental 110,000 (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b) Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.
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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