a. Factory overhead costs During June, Calypso Company incurred factory overhead costs as follows: indirect materials, $8,800; indirect labor, $6,600; utilities cost, $4,800; and factory depreciation, $9,000. Journalize the entry to record the factory overhead incurred during June. b. Applying factory overhead Calypso Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000. For Calypso Company, Determine the predetermined factory overhead rate using direct labor hours as the activity base. Determine the amount of factory overhead applied to jobs 200 and 305 in May using the data on direct labor hours from Exercise 2. Prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.
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.
a.
- During June, Calypso Company incurred factory overhead costs as follows: indirect materials, $8,800; indirect labor, $6,600; utilities cost, $4,800; and factory
depreciation , $9,000. Journalize the entry to record the factory overhead incurred during June.
b. Applying factory overhead
- Calypso Company estimates that total factory overhead costs will be $620,000 for the year. Direct labor hours are estimated to be 80,000. For Calypso Company,
- Determine the predetermined factory overhead rate using direct labor hours as the activity base.
- Determine the amount of factory overhead applied to jobs 200 and 305 in May using the data on direct labor hours from Exercise 2.
- Prepare the
journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.
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