verhead cost for the year would be $160,000. They further estimated the variable overhead cost to be $4.00 per direct labor-hour. All overhead at Kingsley Products is applied on the basis of direct labor-hours. During the year, fixed overhead costs were exactly as planned ($160,000). Variable overhead was incurred at $4.50 per direct labor-hour. Underapplied overhead for the year w
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.
Kingsley Products estimated that direct labor for the year would be 64,000 hours. The company also estimated that the fixed
Required:
How many direct labor-hours were worked during the period?
Answer :
Estimated fixed overhead cost per direct labor hour= $160,000/64,000
= $2.50
Predetermined overhead rate = Estimated variable overhead cost per direct labor hour + Estimated fixed overhead cost per direct labor hour
= $4 + $2.50
= $6.50
Overhead applied = Actual direct labor hours * Predetermined overhead rate
= Actual direct labor hours * $6.50
Actual variable overhead cost = Actual direct labor hours * Actual variable overhead cost per direct labor hour
= Actual direct labor hours * $4.50
Actual total overhead cost = Actual factory overhead cost + Actual variable overhead cost
= $160,000 + Actual direct labor hours * $4.50
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