Calculating Departmental Overhead Rates and Applying Overhead to Production At the beginning of the year, Glaser Company estimated the following: Overhead Direct labor hours Machine hours Overhead Direct labor hours Assembly Department $470,000 Machine hours 104,000 79,250 Testing Department Total Assembly Testing Department Department Total $56,400 12,480 9,510 Glaser uses departmental overhead rates. In the assembly department, overhead is applied on the basis of direct labor hours. In the testing department, overhead is applied on the basis of machine hours. Actual data for the month of March are as follows: $399,500 128,960 95,100 $ $ $47,940 15,475 $869,500 11,412 232,960 174,350 04,340 27,955 20,922 Required: 1. Calculate the predetermined overhead rates for the assembly and testing departments. Round your answers to the nearest cent. Assembly department overhead rate Testing department overhead rate 2. Calculate the overhead applied to production in each department for the month of March. If required, round your answers to nearest whole value. $ per direct labor hour $ per machine hour Assembly department Testing department 3. By how much has each department's overhead been overapplied? Underapplied? Assembly department $ Testing department $
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.
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