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Distinguishing between job order costing and process costing

Would the following companies most likely use job order costing or process costing?

b. A manufacturer of specialtywakeboards

Short Answer

Expert verified

A manufacturer of specialty wakeboards is most likely to use a job-order costing system.

Step by step solution

01

Cost of production

The cost of production is defined as the total cost incurred by the company to produce a specific quantity of the product.

02

Job order costing

A job order costing system is the system that tracks the cost of manufacturing each product. This costing method is usually adopted when the manufacturer produces the products when customers order a small quantity or unique product batch. Hence, specialty wakeboard manufacturers are most likely to use a job-order costing system.

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Most popular questions from this chapter

Question: Using job order costing in a service company

Assume that Rothโ€™s accountants are expected to work a total of 8,000 direct labor hours in 2018. Rothโ€™s estimated total indirect costs are $96,000 and the allocation base used is direct labor hours.

Requirements

2. What indirect costs will be allocated to Client 507 if Jack Smith, an accountant at Roth Accounting, works 15 hours to prepare the financial statements?

Young Foundry uses a predetermined overhead allocation rate to allocate overhead to individual jobs, based on the machine hours required. At the beginning of 2018, the company expected to incur the following:

Manufacturing overhead costs

\(840,000

Direct labor cost

1,480,000

Machine hours

70,000 hours

At the end of 2018, the company had actually incurred:

Direct labor cost

\)1,230,000

Depreciation on manufacturing plant and equipment

620,000

Property taxes on plant

35,500

Sales salaries

26,000

Delivery driverโ€™s wages

22,500

Plant janitorโ€™s wages

17,000

Machine hours

60,000 hours

Requirements

3. Post the manufacturing overhead transactions to the Manufacturing Overhead T-account. Is manufacturing overhead underallocated or overallocated? By how much?

Question: Journalize the following transactions for Margeโ€™s Sofas. Explanations are not required.

h. Sold inventory on account, \(22,000; cost of goods sold, \)18,000.

How is the predetermined overhead allocation rate used by service companies?

Comparing actual to allocated overhead

Columbus Enterprises reports the following information at December 31, 2018:

Manufacturing overhead

3,500

50,600

19,000

34,500

Requirements

2. What is the allocated manufacturing overhead?

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