Unigloo Corporation uses a predetermined overhead rate based on direct labour-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Direct materials $5,000 Direct labour $19,000 Rent on factory building $16,000 Sales salaries $24,000 Depreciation of corporate office printers $13,000 Depreciation on factory machinery $7,000 Indirect materials $11,000 Indirect labour $14,000 Unigloo estimates that 12,000 direct labour-hours will be worked during the year. Calculate the predetermined overhead rate per 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.
Unigloo Corporation uses a predetermined
to apply manufacturing overhead to jobs. The Corporation has provided the following
estimated costs for the next year:
Direct materials $5,000
Direct labour $19,000
Rent on factory building $16,000
Sales salaries $24,000
Depreciation of corporate office printers $13,000
Depreciation on factory machinery $7,000
Indirect materials $11,000
Indirect labour $14,000
Unigloo estimates that 12,000 direct labour-hours will be worked during the year.
Calculate the predetermined overhead rate per hour.
Estimated manufacturing overhead costs are all the indirect costs incurred while producing the product.
Predetermined overhead rate is calculated using an activity base which can be direct labor hours, direct labor costs or machine hours.
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