Mazoon Leather Company decided to use a multiple predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate chosen is labor hours for Primary Treatment Department and machine-hours for Secondary Treatment Department. The accounting records shows the following estimates made at the beginning of the year: Primary Treatment Secondary Treatment Manufacturing overhead cost $ 360,000 $ 240,000 Machine-hours 2,000 15,000 Direct labor-hours 6,000 9,000 Direct labor cost $ 60,000 $ 40,000 What predetermined overhead rates would be used in Mazoon Leather for Primary Treatment Department and Secondary Treatment Department, respectively?
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.
Mazoon Leather Company decided to use a multiple predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate chosen is labor hours for Primary Treatment Department and machine-hours for Secondary Treatment Department. The accounting records shows the following estimates made at the beginning of the year:
|
|
Primary Treatment |
Secondary Treatment |
|
||
|
|
$ |
360,000 |
$ |
240,000 |
|
|
Machine-hours |
|
2,000 |
|
15,000 |
|
|
Direct labor-hours |
|
6,000 |
|
9,000 |
|
|
Direct labor cost |
$ |
60,000 |
$ |
40,000 |
|
What predetermined overhead rates would be used in Mazoon Leather for Primary Treatment Department and Secondary Treatment Department, respectively?
Step by step
Solved in 2 steps
