Budgeted direct labor costs $190,000 $266,000 Budgeted overhead costs Costs of actual material used Actual direct labor costs Actual overhead costs $158,000 $175,000 $247,200 There were two jobs in process on December 31, 2017: Job 11 and Job 12. Costs added to each job as of December 31 are as follows: Direct materials Direct labor Job 11 $4,720 $5,700 Job 12 $5,090 $6,900 Resource Room has no finished-goods inventories because all printing jobs are transferred to cost of goods sold when completed. 1. Compute the overhead allocation rate. 2. Calculate the balance in ending work in process and cost of goods sold before any adjustments for under- or overallocated overhead. Required 3. Calculate under- or overallocated overhead. 4. Calculate the ending balances in work in process and cost of goods sold if the under- or overallocated overhead amount is as follows: a. Written off to cost of goods sold b. Prorated using the overhead allocated in 2017 (before proration) in the ending balances of cost of goods sold and work-in-process control accounts 5. Which of the methods in requirement 4 would you choose? Explain.
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.
Allocation and proration of
information is available for 2017.
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