Tristion Inc. has two production departments, and estimated the following information for the 2022 fiscal year Assembly Dept. Testing Dept. Overhead $1,496,250 $365,625 Direct labour hours 356,250 81,250 Machine hours 80,000 162,500 Currently, the company uses departmental rates to assign overhead costs. Overhead costs are assigned on the basis of direct labour hours for the Assembly Department and machine hours for the Testing Department. For September, the company reported the following actual data: Assembly Dept. Testing Dept. Overhead $107,560 $34,340 Direct labour hours 28,600 6,770 Machine hours 5,700 13,520 Required (A) What are the predetermined overhead rates for each department? (B) Assume that Job R777 used 4 direct labour hours in the Assembly Department and 3 machine hours in the Testing Department. Compute the overhead assigned to Job R777. (C) How much overhead was applied in the month of September? (D) By how much was overhead overassigned or underassigned for September for each department?
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.
Tristion Inc. has two production departments, and estimated the following information for the 2022 fiscal year
|
Assembly Dept. |
Testing Dept. |
|
|
|
$1,496,250 |
$365,625 |
|
Direct labour hours |
356,250 |
81,250 |
|
Machine hours |
80,000 |
162,500 |
Currently, the company uses departmental rates to assign overhead costs. Overhead costs are assigned on the basis of direct labour hours for the Assembly Department and machine hours for the Testing Department.
For September, the company reported the following actual data:
|
Assembly Dept. |
Testing Dept. |
|
|
Overhead |
$107,560 |
$34,340 |
|
Direct labour hours |
28,600 |
6,770 |
|
Machine hours |
5,700 |
13,520 |
Required
(A) What are the predetermined overhead rates for each department?
(B) Assume that Job R777 used 4 direct labour hours in the Assembly Department and 3 machine hours in the Testing Department. Compute the overhead assigned to Job R777.
(C) How much overhead was applied in the month of September?
(D) By how much was overhead overassigned or underassigned for September for each department?
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