The RAND Company uses a job order costing system and computes its predetermined overhead rate at the beginning of each period on the basis of direct labor cost. At the end of current period, the only job in process is the job number 800C. The cost sheet related to job number 800C shows that the following direct materials and direct labor costs were incurred during the period: Direct materials cost: $800 Direct labor cost: $1,200 The work in process inventory account shows a balance of $2,600 at the end of current period. One the basis of above information, what is the predetermined overhead rate as a percentage of direct labor cost? Select one: а. 50% b. 200% с. 75% d. 100%
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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