details of the company that we managed to visit‚ AJ Food Industries. It’s focusing on the product costing which is how the company compute its unit costs in determining the proper amount of overhead cost. We proposed the company to use Activity-Based Costing which is multiple bases in considering the overhead cost. Its an advantage for the company that involved with complex manufacturing process. In this study‚ we take mayonnaise produced by AJ Food Industries in two flavors which are regular (MAYO
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Chapter ’^ l.: v - Production Cost Variance Analyses The preceding three chapters focused on the nature‚ collection‚ and measurement of management accounting information. This is the first of five chapters that deal with the use of that information by management in controlling the organization. This chapter and Chapter 2l describe the calculation and use ofvariances. Chapters 22 to 25 deal with the use of responsibility accounting information in the management control process. Variances A variance
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(A)Compute the predetermined overhead rate using traditional costing with materials cost as the basis? _ Solution: Predetermine overhead rate: Total budgeted overhead costs O/H rate = (Budgeted = Estimated) Materials cost budgeted (BASIS) 550‚000 =
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Job Order Cost System There are two main cost accounting systems used: Job order cost systems and Process cost systems. Both have very distinct differences that help each specialize in a certain type of manufacturing company. The job order cost system in particular is used to "provide product costs for each quantity of a product that is manufactured." When a product is called to be manufactured‚ then it is called a job. Once the job is ordered‚ the manufacturing company must go through a flow
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calculate the total overhead (burden) for years 1988 and 1990. For year 1988‚ the total overhead was $109‚890; dividing by the total direct labor of $25‚294 gives an overhead rate of 434%. For year 1990‚ the total overhead was $79‚393; dividing by the total direct labor of $14‚102 gives an overhead rate of 563%. Next‚ we will need to calculate the overhead for each product using the overhead rate from each model year. Adding the material costs and labor costs to the total overhead gave us total costs
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oil fields. (The Norwegian currency is the krone‚ which is denoted by Nkr.) The company uses a sob-order costing system arid applies manufacturing overhead cost to jobs on the basis of direct labor-hours. At the beginning of the year‚ the following estimates were made for the purpose of computing the predetermined overhead rate: manufacturing overhead cost‚ Nkr360‚000; and direct labor-hours‚ 900. The following transactions took place during the year (all purchases and services were acquired
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b.c.d.Producta.b.c.d.Directa.b.c.d.a.b.c.d.a.b.c.d.direct materiala.b.c.d.a.b.c.d.a.b.c.d.a.b.c.d.a.b.c.d.Raw material used in productionTotal manufacturing costs charged to production during the year (includes direct material‚ direct labor‚ and overhead equal to 60% of direct labor cost)Cost of goods available for saleSelling and Administrative expensesInventoriesRaw MaterialWork in ProcessFinished Goodsa.b.c.d.a.b.c.d.a.b.c.d.a.b.c.d.Raw Material InventoryWork in Process InventoryFinished Goods
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Utilities Overhead] = Total Cost of Material + Total Cost of Labor + Utilities Overhead = 120‚000 + 90‚000 + 40‚000 = $ 250‚000 b- Total Cost of Operation = Cost of goods manufactured + Selling‚ General admin. and expenses. = 250‚000 + 60‚000 = $ 310‚000 c- Prime Cost =Direct Material Cost + Direct Labor Cost = 80‚000 + 65‚000 = $ 145‚000 d- Conversion Cost = Direct Labor + Factory Overhead = Direct labor + [Indirect Material + Indirect Labor + Utilities Overhead] = 65
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scatter diagram provide above‚ that the overhead cost function for the machine is Y = 36557+ 26.96X‚ X representing the machine hours. The variable overhead for Island Wheels Ltd for an additional machine hour will be $26.96 and the fixed cost is $36557. The R square being 0.902783345 shows the variation in overhead cost in machine hours is 90.28%. the average distance of the data points from the fit line is 2603.23 indicating that average difference of overhead costs from the linear is $2603.23. 2
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with a significant amount of overhead pertaining to a diversity of activities in providing goods (or services) to customers whose demands also vary. Solutions to Exercises 9-21 (30 min.) Plantwide versus Department Allocation: Munoz Sporting Equipment. Sample Problem Solution ||Baseball Bats|||Tennis rackets|| a.|Revenue |$1‚350‚000|||$900‚000|| |Direct Labor |250‚000|||125‚000|| |Direct Materials |550‚000|||275‚000|| |Overhead |500‚000|a||250‚000|b| |Profit
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