Verizox Company uses a job order cost system with manufacturing overhead applied to products based on direct labor hours. At the beginning of the most recent year, the company estimated its manufacturing overhead cost at $179,520. Estimated direct labor cost was $467,500 for 18,700 hours. Actual costs for the most recent month are summarized here: Item Description Total Cost Direct labor (1,870 hours) $ 46,751 Indirect costs Indirect labor 2,470 Indirect materials 3,320 Factory rent 3,380 Factory supervision 4,850 Factory depreciation 5,770 Factory janitorial work 1,300 Factory insurance 1,790 General and administrative salaries 4,250 Selling expenses 5,410 Required:1. Calculate the predetermined overhead rate. 2. Calculate the amount of applied manufacturing overhead. 3. Calculate actual manufacturing overhead costs. 4. Compute over- or underapplied overhead.
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.
Verizox Company uses a
Actual costs for the most recent month are summarized here:
| Item Description | Total Cost | |
| Direct labor (1,870 hours) | $ | 46,751 |
| Indirect costs | ||
| Indirect labor | 2,470 | |
| Indirect materials | 3,320 | |
| Factory rent | 3,380 | |
| Factory supervision | 4,850 | |
| Factory depreciation | 5,770 | |
| Factory janitorial work | 1,300 | |
| Factory insurance | 1,790 | |
| General and administrative salaries | 4,250 | |
| Selling expenses | 5,410 | |
Required:
1. Calculate the predetermined overhead rate.
2. Calculate the amount of applied manufacturing overhead.
3. Calculate actual manufacturing overhead costs.
4. Compute over- or underapplied overhead.
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