Traeger Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated bandsaw. Additional information is provided below for the most recent month: Estimates at the beginning of the month: Estimated total fixed manufacturing overhead Capacity of the bandsaw Actual results: $26,316 340 hours Actual total fixed manufacturing overhead Actual hours of bandsaw use $26,316 320 hours The cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes would be closest to:
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.
![**Traeger Woodworking Corporation Case Study**
Traeger Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated bandsaw.
**Monthly Estimates:**
- Estimated total fixed manufacturing overhead: **$26,316**
- Capacity of the bandsaw: **340 hours**
**Actual Results:**
- Actual total fixed manufacturing overhead: **$26,316**
- Actual hours of bandsaw use: **320 hours**
The cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes would be closest to:
**Multiple Choice:**
- [ ] $1,548
- [ ] $13,932
- [ ] $0
- [ ] $15,480](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffb04437b-3f7e-4496-ba03-3a7f713d70b1%2F7513aacb-e8b0-4587-a5d0-cb6d23237c2a%2Frx5cuw_processed.png&w=3840&q=75)
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