Bob Burgers allocates manufacturing overhead to jobs based on direct labor hours. The company has the following estimated costs for the upcoming year: Direct materials used $50,600 Direct labor costs $70,700 Wages of factory janitors $39,500 Sales supervisor salary $51,600 Utilities for factory $17,000 Rent on factory building $13,500 Advertising expense $5210 The company estimates that 2280 direct labor hours will be worked in the upcoming year, while 1900 machine hours will be used during the year. The predetermined manufacturing overhead rate per direct labor hour will be
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.
Predetermined manufacturing overhead rate per machine hour
= Total estimated manufacturing overhead / Total estimated direct labor hours
Total estimated manufacturing overhead
= Wages of factory janitors + Utilities for factory + Rent on factory building
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
