Alles Company uses a job costing system that applies factory overhead on the basis of direct labor dollars. No job was in process on February 1. During the month of February, the company worked on these three jobs: Job Number B10 C44 G15 Direct labor ($8/hour) $ 34,000 ? $ 10,000 Direct materials 42,000 61,000 ? Overhead applied ? 20,750 6,000 During the month, the company completed and transferred Job B10 to the Finished Goods Inventory. Jobs C44 and G15 were not completed and remain in Work-in-Process at the cost of $148,650 at the end of the month. Actual factory overhead costs during the month totaled $38,500. Required: 1. What is the predetermined factory overhead rate? 2. Compute the amount of underapplied or overapplied overhead for February.
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.
Alles Company uses a
| Job Number | |||||||||
| B10 | C44 | G15 | |||||||
| Direct labor ($8/hour) | $ | 34,000 | ? | $ | 10,000 | ||||
| Direct materials | 42,000 | 61,000 | ? | ||||||
| Overhead applied | ? | 20,750 | 6,000 | ||||||
During the month, the company completed and transferred Job B10 to the Finished Goods Inventory. Jobs C44 and G15 were not completed and remain in Work-in-Process at the cost of $148,650 at the end of the month. Actual
Required:
1. What is the predetermined factory overhead rate?
2. Compute the amount of underapplied or overapplied overhead for February.
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