Reciprocal Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments GeneralFactory Receiving Assembly Finishing Direct overhead $400,000 $160,000 $43,000 $74,000 Square footage — 2,700 5,400 5,400 Number of receiving orders 300 — 1,680 1,020 Direct labor hours — — 25,000 40,000 Required: 1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal method. (Round allocation ratios to two decimal places. Round allocated costs to the nearest dollar. If an amount is zero, enter "0".) Allocation ratios: General Factory Receiving Assembly Finishing Square footage Number of receiving orders Allocations: General Factory Receiving Assembly Finishing Direct overhead cost $ $ $ $ General Factory Receiving Total $ $ $ $ 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.) Overhead Rate Assembly $ per direct labor hour Finishing $ per direct labor hour
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.
Reciprocal Method
Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:
Support Departments |
Producing Departments | |||
| General Factory |
Receiving | Assembly | Finishing | |
| Direct overhead | $400,000 | $160,000 | $43,000 | $74,000 |
| Square footage | — | 2,700 | 5,400 | 5,400 |
| Number of receiving orders | 300 | — | 1,680 | 1,020 |
| Direct labor hours | — | — | 25,000 | 40,000 |
Required:
1. Allocate the overhead costs of the support departments to the producing departments using the reciprocal method. (Round allocation ratios to two decimal places. Round allocated costs to the nearest dollar. If an amount is zero, enter "0".)
Allocation ratios:
| General Factory | Receiving | Assembly | Finishing | |
| Square footage | ||||
| Number of receiving orders |
Allocations:
| General Factory | Receiving | Assembly | Finishing | |
| Direct overhead cost | $ | $ | $ | $ |
| General Factory | ||||
| Receiving | ||||
| Total | $ | $ | $ | $ |
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
| Overhead Rate | |
| Assembly | $ per direct labor hour |
| Finishing | $ per direct labor hour |
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