Badour Inc. is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours were 127,000 and estimated factory overhead was $939,800. The following information was for September. Job X was completed during September, while Job Y was started but not finished. September 1, inventories: Materials $ 10,400 Work-in-process (All Job X) 38,700 Finished goods 81,700 Materials purchases $ 138,000 Direct materials requisitioned: Job X $ 55,800 Job Y 41,300 Direct labor hours: Job X 6,300 Job Y 5,800 Labor costs incurred: Direct labor ($7.30 per hour) $ 88,330 Indirect labor 22,000 Factory supervisory salaries 8,500 Rental costs: Factory $ 10,300 Administrative offices 3,500 Total equipment depreciation costs: Factory $ 10,400 Administrative offices 3,200 Indirect materials used $ 21,000 The underapplied or overapplied overhead for September is:
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.
Badour Inc. is a job-order manufacturer. The company uses a predetermined overhead rate based on direct labor hours to apply overhead to individual jobs. For the current year, estimated direct labor hours were 127,000 and estimated factory overhead was $939,800. The following information was for September. Job X was completed during September, while Job Y was started but not finished.
| September 1, inventories: | ||||
| Materials | $ | 10,400 | ||
| Work-in-process (All Job X) | 38,700 | |||
| Finished goods | 81,700 | |||
| Materials purchases | $ | 138,000 | ||
| Direct materials requisitioned: | ||||
| Job X | $ | 55,800 | ||
| Job Y | 41,300 | |||
| Direct labor hours: | ||||
| Job X | 6,300 | |||
| Job Y | 5,800 | |||
| Labor costs incurred: | ||||
| Direct labor ($7.30 per hour) | $ | 88,330 | ||
| Indirect labor | 22,000 | |||
| Factory supervisory salaries | 8,500 | |||
| Rental costs: | ||||
| Factory | $ | 10,300 | ||
| Administrative offices | 3,500 | |||
| Total equipment |
||||
| Factory | $ | 10,400 | ||
| Administrative offices | 3,200 | |||
| Indirect materials used | $ | 21,000 | ||
The underapplied or overapplied overhead for September is:
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