Wright Brothers is debating the use of direct labour cost or direct labour hours as the cost allocation base for allocating manufactu overhead. The following information is available for the year ende December 31, 2007. Estimated manufacturing overheads Actual manufacturing overhead costs Estimated direct labour cost Actual direct labour cost Estimated direct labour hours Actual direct labour hours $359,600 $340,000 $449,500 $441,000 248.000 242,000 Using direct labour hours as the cost driver, the journal entry to dispose of the manufacturing overhead variance is: O a. Dr. Manufacturing overhead $10,900 and Cr. COGS $10,900 O b. Dr. WIP $10,900 and Cr Manufacturing Overhead $10,900 c. Dr. Manufacturing Overhead $10,900 and Cr. WIP $10,900 Od Dr. COGS $10,900 and Cr Manufacturing Overhead $10,900
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.
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