Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process. Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

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Answer 1

Question

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

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Students have asked these similar questions

Lui Coffee Company roasts and packs coffee beans. The process begins by placing coffee beans into the Roasting Department. From the Roasting Department, coffee beans are then transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at March 31: ACCOUNT ACCOUNT NO. Date Item Debit Credit BalanceDebit BalanceCredit March 1 Bal., 25,000 units, 10% completed 21,250 31 Direct materials, 600,000 units 450,000 471,250 31 Direct labor 244,600 715,850 31 Factory overhead 415,820 1,131,670 31 Goods transferred, 605,000 units ? 31 Bal., ? units, 45% completed ? Required:1. Prepare a cost of production report, and identify the missing amounts for Work in Process—Roasting Department.

Jane Yoakim, President of Estefan Co., recently read an article that claimed that at least 100 of the country's 500 largest companies were either adopting or considering adopting the last in, first out (LIFO) method for valuing inventories. The article stated that the firms were switching to LIFO to (1) neutralize the effect of inflation in their financial statements, (2) eliminate inventory profits, and (3) reduce income taxes. Ms. Yoakim wonders if the switch would benefit her company. Estefan currently uses the first-in, first-out (FIFO) method of inventory valuation in its periodic inventory system. The company has a high inventory turnover rate, and inventories represent a significant proportion of the assets. Ms. Yoakim has been told that the LIFO system is more costly to operate and will provide little benefit to companies with high turnover. She intends to use the inventory method that is best for the company in the long run rather than selecting a method just because it is the…

please help with how im supposed to solve this

Answer 2

Question

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

Answer 6

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

Answer 7

Chapter 19, Problem 1DQ

To determine

Introduction:

Factory overheads are the overheads which are involved in operations of a factory. These are the overheads incurred in the factory other than the costs of direct materials and direct labour. Therefore, they are also known as indirect costs involved in a production process.

Here, in the problem provided to us we are required to ascertain the reason as to why a company assigns the amount of factory overheads to individual jobs or job lots.

Answer 8

Expert Solution & Answer

Answer to Problem 1DQ

Solution:

As per the accounting principles, direct materials cost, direct labour costs and factory overhead are all part of the cost of a product during inventory valuation. However, costs such as selling and marketing costs etc. are not part of the inventory valuation and are directly reported in the income statement.

Factory overheads generally include factory rent, factory depreciation, factory supervisor's salary etc. and therefore it is very difficult for the accountants to assign all these costs to individual jobs or job lots since they are not directly related to production process.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

As mentioned above that assigning overheads such as factory rent, factory depreciation etc is a difficult task, but their assignment is also important in order to find out the total inventory valuation and cost of goods sold. Rather these overheads are usually predetermined and assigned to jobs so that we can determine the job's total cost in advance which can help the management in taking many important decisions such as the sale price of the product, desired profit margin, costs which can be reduced etc.

And therefore, the company or an organisation must estimate the amount of factory overheads to individual job or job lots.

Answer 12

Conclusion

Hence, assignment of factory overheads to individual job or job lots helps the management in taking important decisions such as price of the product, desired profit margin etc.

Answer 13

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