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Business Accounting MANAGERIAL ACCOUNTING FOR MANAGERS EBOOK

1. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activities of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 840 , 000 $ 600 , 000 = 140 % The plantwide predetermined overhead rate is 140%. b. plant-wide predetermine overhead rate p l a n t w i d e p r e det e r e m min e d o v e r h e a d r a t e = d i r e c t l a b o r cos t × p l a n t w i d e o v e r h e a d r a t e = $ 9 , 500 × 140 % = $ 13 , 300 The amount of manufacturing cost applied to job k is $13,300. 2. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activity of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. The unit product cost of D is $90 and R is $50. a. p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 350 , 000 $ 200 , 000 = 175 % The predetermined overhead rate of the fabrication department is 175% direct labor cost. p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 400 , 000 $ 100 , 000 = 400 % The predetermined overhead rate of the machine department is 400% of the direct labor cost p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 90 , 000 $ 300 , 000 = 30 % The predetermined overhead rate of the assembly department is 30% of the direct labor cost. b. Manufacturing overhead that would have been applied to the job k Direct cost in fabrication department $2800 The pre-determined overhead rate in the fabrication department is 175% The direct labor cost of the manufacturing department is $500 Predetermine overhead rate in fabrication department 400% Direct labor cost assembly department $6200 The predetermined overhead rate in the assembly department. 30% direct labor cost Particular Fabricating ($) Machining ($) Assembly ($) Total ($) Direct labor 2800 500 6200 3300 Predetermined 175% 400% 30% Total manufacturing 4900 2000 1860 8760 The manufacturing cost applied to job k is $8,760. 3. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activities of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. The unit product cost of D is $90 and R is $50 The manufacturing overhead that would be applied to job K using a plantwide predetermined overhead rate which is 140% of direct labor cost is $13,300. The manufacturing overhead was applied using a departmental predetermined overhead rate of $8760. So, if department predetermined overhead is used to apply manufacturing overhead then it would result in less manufacturing overhead than the plantwide predetermined overhead. The plantwide predetermination overhead rate is 140% whereas the departmental predetermined overhead rate is 175% for the fabrication department 400%for the machine department and 30% for the assembling department. This shows that manufacturing overhead for the assembling department would be much higher if a plantwide predetermined overhead rate is used at 140% of direct labor cost whereas the department overhead rate is 30%. In the case of fabricating and machine department, the departmental predetermined overhead rate is 175% and 400% respectively which are higher than the plantwide overhead rate of 140%. So, less manufacturing overhead is applied using a plantwide predetermined overhead rate. 4. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activities of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. The unit product cost of D is $90 and R is $50 Particular Amount ($) Direct material 4600 Direct labor 9500 Manufacturing overhead 13300 Total manufacturing cost 27400 Bidding rate (150% of total manufacturing cost) 150% Bid price of Job K 41100 Bid price of job K is $41,100. Particular Amount ($) Direct material 4,600 Direct labor 9,500 Manufacturing overhead 8,760 Total manufacturing cost 22,860 Bidding rate (150% of total manufacturing cost) 150% Bid price of Job K 34,290 Bid price of job K is $34,290.

1. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activities of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 840 , 000 $ 600 , 000 = 140 % The plantwide predetermined overhead rate is 140%. b. plant-wide predetermine overhead rate p l a n t w i d e p r e det e r e m min e d o v e r h e a d r a t e = d i r e c t l a b o r cos t × p l a n t w i d e o v e r h e a d r a t e = $ 9 , 500 × 140 % = $ 13 , 300 The amount of manufacturing cost applied to job k is $13,300. 2. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activity of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. The unit product cost of D is $90 and R is $50. a. p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 350 , 000 $ 200 , 000 = 175 % The predetermined overhead rate of the fabrication department is 175% direct labor cost. p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 400 , 000 $ 100 , 000 = 400 % The predetermined overhead rate of the machine department is 400% of the direct labor cost p r e det e r mined o v e r h e a d r a t e = E s t i m a t e d t o t a l m a n u f a c t u r i n g o v e r h e a d cos t E s t i m a t e d t o t a l a m o u n t o f a l l o c a t i o n b a s e = $ 90 , 000 $ 300 , 000 = 30 % The predetermined overhead rate of the assembly department is 30% of the direct labor cost. b. Manufacturing overhead that would have been applied to the job k Direct cost in fabrication department $2800 The pre-determined overhead rate in the fabrication department is 175% The direct labor cost of the manufacturing department is $500 Predetermine overhead rate in fabrication department 400% Direct labor cost assembly department $6200 The predetermined overhead rate in the assembly department. 30% direct labor cost Particular Fabricating ($) Machining ($) Assembly ($) Total ($) Direct labor 2800 500 6200 3300 Predetermined 175% 400% 30% Total manufacturing 4900 2000 1860 8760 The manufacturing cost applied to job k is $8,760. 3. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activities of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. The unit product cost of D is $90 and R is $50 The manufacturing overhead that would be applied to job K using a plantwide predetermined overhead rate which is 140% of direct labor cost is $13,300. The manufacturing overhead was applied using a departmental predetermined overhead rate of $8760. So, if department predetermined overhead is used to apply manufacturing overhead then it would result in less manufacturing overhead than the plantwide predetermined overhead. The plantwide predetermination overhead rate is 140% whereas the departmental predetermined overhead rate is 175% for the fabrication department 400%for the machine department and 30% for the assembling department. This shows that manufacturing overhead for the assembling department would be much higher if a plantwide predetermined overhead rate is used at 140% of direct labor cost whereas the department overhead rate is 30%. In the case of fabricating and machine department, the departmental predetermined overhead rate is 175% and 400% respectively which are higher than the plantwide overhead rate of 140%. So, less manufacturing overhead is applied using a plantwide predetermined overhead rate. 4. Introduction: Job costing is a technique of determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead. Absorption costing is used to calculate the cost of a product while taking indirect and direct expenses into account. Activity-based costing assigns the cost of all the activities of the organization according to their actual consumption To compute: The predetermined overhead rate, total manufacturing cost established bit price, and cost of goods sold. The unit product cost of D is $90 and R is $50 Particular Amount ($) Direct material 4600 Direct labor 9500 Manufacturing overhead 13300 Total manufacturing cost 27400 Bidding rate (150% of total manufacturing cost) 150% Bid price of Job K 41100 Bid price of job K is $41,100. Particular Amount ($) Direct material 4,600 Direct labor 9,500 Manufacturing overhead 8,760 Total manufacturing cost 22,860 Bidding rate (150% of total manufacturing cost) 150% Bid price of Job K 34,290 Bid price of job K is $34,290.

Solution Summary: The author explains job costing as determining the cost of a manufacturing job rather than the process of the job. Manufacturing overhead is applied to product or job order and is determined as predetermined overhead.

MANAGERIAL ACCOUNTING FOR MANAGERS EBOOK

MANAGERIAL ACCOUNTING FOR MANAGERS EBOOK

6th Edition

ISBN: 9781264445615

Author: Noreen

Publisher: MCG

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