"Burlington Clock Works manufacture fines, handcrafts clocks. The firm uses a job-order costing system, and manufacturing overhead is applied on the basis of direct-labor hours. Estimated manufacturing overhead for the year is $240,000. The firm employs 10 master clockmakers, who constitute the direct-labor force. Each of these employees is expected to work 2,000 hours during the year, which represents each employee’s practical capacity. The following events occurred during October. The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot. Twenty brass counterweights were requisitioned for production. Each weight cost $23. Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material. Depreciation on the clockworks building for October was $8,000. A $400 utility bill was paid in cash. Timecards showed the following usage of labor: Job number G60: 12 grandfather clocks, 1,000 hours of direct labor Job number C81: 20 cuckoo clocks, 700 hours of direct labor The master clockmakers (direct-labor personnel) earn $20 per hour The October property tax bill for $910 was received but has not yet been paid in cash. The firm employs laborers who perform various tasks such as material handling and shop cleanup. Their wages for October amounted to $2,500. Job number G60, which was started in July, was finished in October. The total cost of the job was $14,400. Nine of the grandfather clocks from job number G60 were sold in October for $1,500 each. Required: 1.Calculate the firm’s predetermined overhead rate for the year. 2.Prepare journal entries to record the events described above
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.
"Burlington Clock Works manufacture fines, handcrafts clocks. The firm uses a
- The firm purchased 3,000 board feet of mahogany veneer at $11 per board foot.
- Twenty brass counterweights were requisitioned for production. Each weight cost $23.
- Five gallons of glue were requisitioned for production. The glue cost $20 per gallon. Glue is treated as an indirect material.
Depreciation on the clockworks building for October was $8,000.- A $400 utility bill was paid in cash.
- Timecards showed the following usage of labor:
Job number G60: 12 grandfather clocks, 1,000 hours of direct labor
Job number C81: 20 cuckoo clocks, 700 hours of direct labor
The master clockmakers (direct-labor personnel) earn $20 per hour
- The October property tax bill for $910 was received but has not yet been paid in cash.
- The firm employs laborers who perform various tasks such as material handling and shop cleanup. Their wages for October amounted to $2,500.
- Job number G60, which was started in July, was finished in October. The total cost of the job was $14,400.
- Nine of the grandfather clocks from job number G60 were sold in October for $1,500 each.
Required:
1.Calculate the firm’s predetermined overhead rate for the year.
2.Prepare
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