Lifestyle Roofing uses job order costing and applies manufacturing overhead too individual projects using predetermined overhead rates. In the Installation Division, overhead is applied on the basis of direct labour hours, and in the Disposal Division, overhead is applied on the basis of debris tonnage hauled to the landfill. At the beginning of the current year, management made the following budget estimates to determine overhead application rates. Annual Estimates Direct labor Manufacturing overhead Direct labor hours Tons of Debris Installation Disposal $750,000 $120,000 $100,000 $36.000 25,000 10,000 0 300 Job #652 for Bees Grocery measured 8,348 square-feet. The job was started and completed in May. Information pertaining to this project is provided below. Job no. 652 (8.348 square-feet): Cost of material used on job Direct labor cost Direct labor hours Tons of debris Installation Disposal $30,000 $1,000 $7,800 $1,100 250 0 80 7 a. Determine the overhead rate that should be used by each division in applying overhead costs to job #652.
Lifestyle Roofing uses job order costing and applies manufacturing overhead too individual projects using predetermined overhead rates. In the Installation Division, overhead is applied on the basis of direct labour hours, and in the Disposal Division, overhead is applied on the basis of debris tonnage hauled to the landfill. At the beginning of the current year, management made the following budget estimates to determine overhead application rates. Annual Estimates Direct labor Manufacturing overhead Direct labor hours Tons of Debris Installation Disposal $750,000 $120,000 $100,000 $36.000 25,000 10,000 0 300 Job #652 for Bees Grocery measured 8,348 square-feet. The job was started and completed in May. Information pertaining to this project is provided below. Job no. 652 (8.348 square-feet): Cost of material used on job Direct labor cost Direct labor hours Tons of debris Installation Disposal $30,000 $1,000 $7,800 $1,100 250 0 80 7 a. Determine the overhead rate that should be used by each division in applying overhead costs to job #652.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 57P: Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are...
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Concept explainers
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.
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Transcribed Image Text:Lifestyle Roofing uses job order costing and applies manufacturing overhead too individual projects
using predetermined overhead rates. In the Installation Division, overhead is applied on the basis of
direct labour hours, and in the Disposal Division, overhead is applied on the basis of debris tonnage
hauled to the landfill. At the beginning of the current year, management made the following budget
estimates to determine overhead application rates.
Annual Estimates
Direct labor
Manufacturing overhead
Direct labor hours
Tons of Debris
Installation Disposal
$750,000 $120,000
$100,000 $36,000
25,000
10,000
300
Job #652 for Bees Grocery measured 8,348 square-feet. The job was started and completed in May.
Information pertaining to this project is provided below.
Job no. 652 (8,348 square-feet):
Cost of material used on job
Direct labor cost
Direct labor hours
Tons of debris
Installation Disposal
$30,000
$7,800
250
0
$1,000
$1,100
80
7
a. Determine the overhead rate that should be used by each division in applying overhead costs
to job #652.
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