Manufacturing overhead costs $ 840,000 Direct labor costs 1,480,000 Machine hours 70,000 hours At the end of 2018, the company had actually incurred: Direct labor costs $ 1,230,000 Depreciation on manufacturing plant and equipment 620,000 Property taxes on plant 35,500 Sales salaries 26,000 Delivery drivers' wages 22,500 Plant janitor's wages 17,000 Machine hours 60,000 hours
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.
Allocating and adjusting manufacturing
Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:
Requirements
- Compute Young’s predetermined overhead allocation rate.
- Prepare the
journal entry to allocate manufacturing overhead. - Post the manufacturing overhead transactions to the Manufacturing Overhead T-account. Is manufacturing overhead underallocated or overallocated? By how much?
- Prepare the journal entry to adjust for the underallocated or overallocated manufacturing overhead. Does your entry increase or decrease Cost of Goods Sold?
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