For example, for a manufacturer allocating maintenance costs, which are an overhead cost, is it better to allocate to each production department equally by the number of machines that need to be maintained or by the square footage of space that needs to be maintained? Whereas Kamil and Barry are discussing the allocation of hours, the issue of allocating costs raises similar questions. Similarly, businesses and other organizations must create an allocation system for assigning limited resources, such as overhead. Ultimately, each must decide which method to use to allocate time, and they can make that decision based on their own analyses. Each job is unique.Both roommates make valid points about allocating limited resources. Rowan Company produces pipes for concertquality organs. Job costing, unit cost, ending work in process. Post the journal entrifies to T-accounts for all of the inventories, Cost of Goods Sold, the Manutacturing Overhead Control Account, and the Manufacturing Overhead Allocated Account. Also note which subsidiary ledger, if any, should be referenced as backup for the entry.Ģ. For each journal entry indicate the source document that would be used to authorize each entry. Prepare journal entries to record the transactions for 2017 including an entry to close out over-or underallocated overhead to cost of goods sold. Indirect materials are insignificant so there is no inventory account for indirect materials.ġ. uses a normal-costing system and allocates overhead to work in process at a rate of $\$ 3.10$ per direct manufacturing labor dollar. Dakota provides the following information: Dakota allocates manufacturing overhead costs using direct manufacturing labor costs. Dakota Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and
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