The total factory overhead for Diva-nation is budgeted for the year at $180,000, divided into two departments: Cutting, $60,000, and Sewing, $120,000. Diva-nation manufactures two types of men's pants: jeans and khakis. The jeans require 0.04 direct labor hour in Cutting and 0.06 direct labor hour in Sewing. The khakis require 0.06 direct labor hour in Cutting and 0.04 direct labor hour in Sewing. Each product is budgeted for 20,000 units of production for the year. Determine (a) the total number of budgeted direct labor hours for the year in each department, (b) the departmental factory overhead rates for both departments, and (c) the factory overhead allocated per unit for each product using the department factory overhead allocation rates.
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 total factory
two departments: Cutting, $60,000, and Sewing, $120,000. Diva-nation manufactures two
types of men's pants: jeans and khakis. The jeans require 0.04 direct labor hour in Cutting and
0.06 direct labor hour in Sewing. The khakis require 0.06 direct labor hour in Cutting and 0.04
direct labor hour in Sewing. Each product is budgeted for 20,000 units of production for the
year. Determine (a) the total number of budgeted direct labor hours for the year in each
department, (b) the departmental factory overhead rates for both departments, and (c) the
factory overhead allocated per unit for each product using the department factory overhead
allocation rates.
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