Lotz Corporation has two manufacturing departments--Casting and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Casting Finishing Total Estimated total machine-hours (MHs) 2,000 8,000 10,000 Estimated total fixed manufacturing overhead cost $ 10,200 $ 19,200 $ 29,400 Estimated variable manufacturing overhead cost per MH $ 1.20 $ 2.20 During the most recent month, the company started and completed two jobs--Job F and Job K. There were no beginning inventories. Data concerning those two jobs follow: Job F Job K Direct materials $ 14,400 $ 7,100 Direct labor cost $ 22,500 $ 6,600 Casting machine-hours 1,400 600 Finishing machine-hours 3,200 4,800 Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices. The calculated selling price for Job F is closest to: $96,100 $60,440 $30,220 $90,660
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.
| Casting | Finishing | Total | ||||
| Estimated total machine-hours (MHs) | 2,000 | 8,000 | 10,000 | |||
| Estimated total fixed manufacturing overhead cost | $ | 10,200 | $ | 19,200 | $ | 29,400 |
| Estimated variable manufacturing overhead cost per MH | $ | 1.20 | $ | 2.20 |
During the most recent month, the company started and completed two jobs--Job F and Job K. There were no beginning inventories. Data concerning those two jobs follow:
| Job F | Job K | |||
| Direct materials | $ | 14,400 | $ | 7,100 |
| Direct labor cost | $ | 22,500 | $ | 6,600 |
| Casting machine-hours | 1,400 | 600 | ||
| Finishing machine-hours | 3,200 | 4,800 |
Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on
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$96,100
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$60,440
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$30,220
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$90,660
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