Manufacturing overhead allocation: Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads . These costs are allocated to the products using the predetermined overhead allocation rate. The formula of predetermined overhead allocation rate is as follows: Predetermined overhead allocation rate = Estimated Manufacturing overhead Cost Allocation base Under/ over allocation of overhead: The overheads are allocated using an overhead allocation rate which is calculated on the basis of estimated overhead costs and allocation bases. Hence there may be a difference in allocated overhead and actual overhead incurred. This difference gives birth to the under/ over allocation of overhead. To indicate: The difference between underallocated and overallocated overhead and the reason for each situation
Manufacturing overhead allocation: Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads . These costs are allocated to the products using the predetermined overhead allocation rate. The formula of predetermined overhead allocation rate is as follows: Predetermined overhead allocation rate = Estimated Manufacturing overhead Cost Allocation base Under/ over allocation of overhead: The overheads are allocated using an overhead allocation rate which is calculated on the basis of estimated overhead costs and allocation bases. Hence there may be a difference in allocated overhead and actual overhead incurred. This difference gives birth to the under/ over allocation of overhead. To indicate: The difference between underallocated and overallocated overhead and the reason for each situation
Definition Definition Total cost of procuring or producing a product or the cost that an individual or business owner undertakes for the manufacturing of goods.
Chapter 19, Problem 19RQ
To determine
Manufacturing overhead allocation:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the predetermined overhead allocation rate. The formula of predetermined overhead allocation rate is as follows:
Under/ over allocation of overhead:
The overheads are allocated using an overhead allocation rate which is calculated on the basis of estimated overhead costs and allocation bases. Hence there may be a difference in allocated overhead and actual overhead incurred. This difference gives birth to the under/ over allocation of overhead.
To indicate:
The difference between underallocated and overallocated overhead and the reason for each situation
Explore the concept of accounting flexibility and its impact on the reliability and usefulness of financial information. While adaptability in accounting methods can allow organizations to better reflect their unique circumstances, it may also introduce the risk of selective application or manipulation. Discuss the appropriate balance between standardization and customization in accounting practices, and the safeguards that can be implemented to preserve the integrity of financial reporting.
Beginning inventory was $4,000, purchases totaled $31,000, and sales were $20,000. What is the ending inventory?
Iris Company has provided the following information
regarding two of its items of inventory at year-end: There
are 200 units of Item A, having a cost of $10 per unit, a
selling price of $14 and a cost to sell of $6 per unit. There
are 150 units of Item B, having a cost of $40 per unit, a
selling price of $46 and a cost to sell of $4 per unit. How
much is the ending inventory using lower of cost or net
realizable value on an item-by-item basis?
a. $8,350.
b. $8,750.
c. $8,000.
d. $7,600.
Chapter 19 Solutions
Horngren's Accounting, Student Value Edition (12th Edition)