Metal Company budgeted $571,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead: Overhead Cost Pool Budgeted Overhead Cost Budgeted Level for Cost Driver Overhead Cost Driver Materials handling $ 144,000 4,800 pounds Weight of materials Machine setup 22,000 550 setups Number of setups Machine repair 1,580 31,600 machine hours Machine hours Inspections 16,000 320 inspections Number of inspections Requirements for Job #971 which manufactured 4 units of product: Direct labor 20 hours Direct materials 290 pounds Machine setup 40 setups Machine hours 16,600 machine hours Inspections 15 inspections If Metal Company uses a volume-based overhead rate based on direct labor hours, the manufacturing overhead for Job #971 is:
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.
Metal Company budgeted $571,000 manufacturing direct wages, 2,000 direct labor hours, and had the following manufacturing overhead:
|
Overhead Cost Pool |
Budgeted Overhead Cost |
Budgeted Level for Cost Driver |
Overhead Cost Driver |
|
|
Materials handling |
$ 144,000 |
4,800 |
pounds |
Weight of materials |
|
Machine setup |
22,000 |
550 |
setups |
Number of setups |
|
Machine repair |
1,580 |
31,600 |
machine hours |
Machine hours |
|
Inspections |
16,000 |
320 |
inspections |
Number of inspections |
Requirements for Job #971 which manufactured 4 units of product:
|
Direct labor |
20 |
hours |
|
Direct materials |
290 |
pounds |
|
Machine setup |
40 |
setups |
|
Machine hours |
16,600 |
machine hours |
|
Inspections |
15 |
inspections |
If Metal Company uses a volume-based overhead rate based on direct labor hours, the manufacturing overhead for Job #971 is:
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