Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks: Per Unit Hours: Assembly Finishing Calibrating Alarm clocks 3 1 1 Wall clocks 2 2 4 The budget includes the following factory overhead by department: Assembly Department $595,000 Finishing Department Calibrating Department 200,000 140,000 Total $935,000 Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks. A. Determine the total number of hours that will be needed by department. Assembly (DLH): Finishing (DLH): Calibrating (DLH): B. Determine the factory overhead rate by department using the multiple production department factory overhead rate method. Round your answers to two decimal places, if necessary. Assembly per direct labor hour: Finishing per direct labor hour: Calibrating per direct labor hour" C. Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall clocks. Round your answers to two decimal places, if necessary. Alarm Clock per unit: Wall Clock per unit: D. Determine the amount of total factory overhead to be allocated to the alarm clocks and wall clocks. 2$
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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Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks:
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