Concept explainers
Concept Introduction:
Job order costing:
Job order costing is applied to the businesses which manufactured the product or provide the services according to the client’s order. As its names suggest, Job order costing is costing done for a particular job.
Predetermined
The Predetermined Overhead allocation rate is used to allocate the manufacturing overhead over the jobs. Predetermined Overhead allocation rate is calculated by dividing the Total Estimated overhead cost by the Total Estimated allocation base.
The formula to calculate the Predetermined Overhead allocation rate is as follows:
Requirement-1:
The Direct Labor rate and Predetermined Overhead allocation rate for the year 2018
Requirement -2:
The total cost for each Job
Requirement -3:
The fees to be charged from each client in order to earn profit equal to 50% of service revenue
Requirement -4:
To indicate: The reason of assignment of
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Horngren's Accounting, Student Value Edition (12th Edition)
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