Winter Company uses a job costing system at its plant. The plant has two production departments – Machining and Assembly. Its job-costing system has two direct cost categories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools (the Machining Department, allocated using machine hours and the Assembly Department, allocated using direct manufacturing labour hours). The 20X8 budget for the plant is as follows: Machining Dept. Assembly Dept. Manufacturing Overhead $1,800,000 $3,600,000 Direct manufacturing labour cost $1,400,000 $2,000,000 Direct manufacturing labour-hours 100,000 200,000 Machine-hours 500,000 200,000 1.Calculate an overhead rate for each department. During the month of August, the cost record for Job #400 shows the following: Machining Dept. Assembly Dept. Direct material used $45,000 $63,000 Direct manufacturing labour costs $14,000 $15,000 Direct manufacturing labour-hours 1,000 1,500 Machine hours 2,000 1,000 2.What is the total manufacturing overhead allocated to Job #400? 3.Given that selling, distribution and administrative costs are absorbed in each job cost at 20% of prime cost & that Job #400 required special design costs of $7,000; calculate the total cost and quotation price of Job #400, where a profit margin of 25 % is applied to the selling price of all jobs. 4.Prepare the general journal entries necessary to reflect the following transactions related to Job #400, using the total figures for: - Direct materials used - Direct labour cost incurred - Manufacturing overheads applied - Production cost of job completed - Selling price of the job (Assume a perpetual inventory system) At the end of 20X8, the company had actually incurred the following: Machining Dept. Assembly Dept. Manufacturing OH incurred $2,100,000 $3,700,000 Direct manufacturing labour costs$1,980,000 $2,200,000 Direct labour hours 110,000 210,000 Machine-hours 55,000 210,000 5.Compute the manufacturing overhead variance for each department and for the plant as a whole. Show the journal entry necessary to dispose of this variance
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.
Winter Company uses a
Machining Dept. Assembly Dept.
Manufacturing Overhead $1,800,000 $3,600,000
Direct
Direct manufacturing labour-hours 100,000 200,000
Machine-hours 500,000 200,000
1.Calculate an overhead rate for each department.
During the month of August, the cost record for Job #400 shows the following:
Machining Dept. Assembly Dept.
Direct material used $45,000 $63,000
Direct manufacturing labour costs $14,000 $15,000
Direct manufacturing labour-hours 1,000 1,500
Machine hours 2,000 1,000
2.What is the total manufacturing overhead allocated to Job #400?
3.Given that selling, distribution and administrative costs are absorbed in each job cost at 20% of prime cost & that Job #400 required special design costs of $7,000; calculate the total cost and quotation price of Job #400, where a profit margin of 25 % is applied to the selling price of all jobs.
4.Prepare the general journal entries necessary to reflect the following transactions related to Job #400, using the total figures for:
- Direct materials used
- Direct labour cost incurred
- Manufacturing
- Production cost of job completed
- Selling price of the job (Assume a perpetual inventory system)
At the end of 20X8, the company had actually incurred the following:
Machining Dept. Assembly Dept.
Manufacturing OH incurred $2,100,000 $3,700,000
Direct manufacturing labour costs$1,980,000 $2,200,000
Direct labour hours 110,000 210,000
Machine-hours 55,000 210,000
5.Compute the manufacturing overhead variance for each department and for the plant as a whole. Show the
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