Cavy Company estimates that the factory overhead for the following year will be $768,900. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 23,300 hours. The total machine hours for the year were 200,000. The actual factory overhead for the year was 700,000. 1)Calculate the predetermined overhead rate to apply factory overhead. 2)Determine the factory overhead applied to Job 150 if the amount of direct labor hours is 720 and to Job 300 if the amount of direct labor hours is 2000. Complete the journal entry to record the overall applied factory overhead. 3)Compute the over-or underapplied amount for the year.
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.
Cavy Company estimates that the factory
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