Miguel Manufacturing Company uses a predetermined manufacturing overhead rate based on direct labor hours. At the beginning of 2023, they estimated total manufacturing overhead costs at $2,352,000, and they estimated total direct labor hours at 7,000. The administration and selling overheads are to be absorbed in each job cost at 15% of prime cost. Distribution cost should be added to each job according to quotes from outside carriage companies. The company wishes to quote for job # 222. Job stats are as follows: Direct Materials $173,250 Direct Labour Cost $240,000 Direct Labour Hours 500 hours Special Design Cost $8,750 Distribution quote from haulage company $21,700 Units of product produced 400 cartons Compute Miguel’s Manufacturing Company predetermined manufacturing overhead rate for 2023.
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.
Miguel Manufacturing Company uses a predetermined manufacturing overhead rate based on direct
labor hours. At the beginning of 2023, they estimated total
$2,352,000, and they estimated total direct labor hours at 7,000.
The administration and selling
Distribution cost should be added to each job according to quotes from outside carriage companies.
The company wishes to quote for job # 222. Job stats are as follows:
| Direct Materials | $173,250 |
| Direct Labour Cost | $240,000 |
| Direct Labour Hours | 500 hours |
| Special Design Cost | $8,750 |
| Distribution quote from haulage company | $21,700 |
| Units of product produced | 400 cartons |
Compute Miguel’s Manufacturing Company predetermined manufacturing overhead rate for
2023.
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