Greetings, Inc. - Job Order Costing Essay examples

659 Words Apr 9th, 2011 3 Pages
Mary E. Jones
01/14/2011
ACC 560

Case 1: Greetings Inc.: Job Order Costing

1. Define and explain the meaning of a predetermined manufacturing overhead rate that is applied in a job-order costing system? A predetermined overhead rate is the rate used to apply manufacturing overhead to work-in-process inventory. The predetermined overhead rate is calculated before the period begins. The first step is to estimate the amount of the activity base that will be required to support operations in the upcoming period. The second step is to estimate the total manufacturing cost at that level of activity. The third step is to compute the predetermined overhead rate by dividing the estimated total manufacturing overhead costs by the
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Compute the product cost for the following three items. Lance John Elway Lambeau Field Armstrong Steel-Framed Print, Wood-Framed Print, Print No Matting with Matting

Direct Material $12.00 $16.00 $20.00 Print

Frame and glass 4.00 6.00 Matting 4.00
Direct labor Picking ([10/60] X $12) 2.00 2.00 2.00
Matting
([20/60] X $21) 7.00 ([30/60] X $21) 10.50
Manufacturing overhead (0.28 X $12, $16, $20) 3.36 4.48 5.60
Total product cost $17.36 $33.48 $48.10

5. (a) How much of the total overhead cost is expected to be allocated to unframed prints? Unframed prints 80,000 X $12 X $0.28 = $268,800 (b) How much of the total overhead cost is expected to be allocated to steel frame prints? Steel-framed prints 15,000 X $16 X $0.28 = $67,200 (c) How much of the total overhead cost is to be allocated to wood framed prints? Wood-framed prints 7,000 X $20 X $0.28 =

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