Georgia Woods, Inc., manufactures furniture to customers' specifications and uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Department One, overhead is applied on the basis of machine-hours, and in Department Two, on the basis
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.
Georgia Woods, Inc., manufactures furniture to customers' specifications and uses
Department One Department Two
Direct Labor Cost $300,000 $225,000
Direct labor hours 20,000 15,000
Manufacturing overhead $420,000 $337,500
Machine-hours 12,000 7,500
Production of a batch of custom furniture ordered by City Furniture (job no. 58) was started early in the year and completed three weeks later on January 29. The records for this job show the following cost information.
Department One Department Two
Job order: City Furniture (job no.58):
Direct materials cost $10,100 $7,600
Direct labor cost $16,500 $11,100
Direct labor hours 1,100 740
Machine-hours 750 500
Selected additional information for January is as follows.
Department One Department Two
Direct labor hours - month of January 1,600 1,200
Machine-hours - month of January 1,100 600
Manufacturing overhead incurred in January $39,010 $26,540
d. Determine the over-or underapplied overhead for each department at the end of January.
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