Wright Brothers is debating the use of direct labor cost or direct labor hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the year ended Dec 31, 2007. Estimated labor cost $449,500 Actual direct labor cost $441,000 Estimated manufacturing overhead $359,600 Actual manufacturing overhead costs $338,000 Actual direct labor hours $242,000 Manufacturing overhead applied based on direct labours hours is: Select one: a. $348,480 b. $350,900 c. $360,000 d.
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.
Wright Brothers is debating the use of direct labor cost or direct labor hours as the cost allocation base for allocating manufacturing
Estimated labor cost $449,500
Actual direct labor cost $441,000
Estimated manufacturing overhead $359,600
Actual
Actual direct labor hours $242,000
Manufacturing overhead applied based on direct labours hours is:
$348,480
$350,900
$360,000
$352,800
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