5. Agora Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year: Direct materials $10,000 Direct labour $30,000 Sales commissions $40,000 Salary of production supervisor $20,000 Indirect materials $4,000 Advertising expense $8,000 Rent of factory equipment $10,000 Agora estimates that 10,000 machine hours will be worked during the year. The predetermined overhead rate per machine hour will be? $9.00 $6.80 $6.40 $3.40 $8.20
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.
5.
Agora Company uses a predetermined
|
Direct materials |
$10,000 |
|
Direct labour |
$30,000 |
|
Sales commissions |
$40,000 |
|
Salary of production supervisor |
$20,000 |
|
Indirect materials |
$4,000 |
|
Advertising expense |
$8,000 |
|
Rent of factory equipment |
$10,000 |
Agora estimates that 10,000 machine hours will be worked during the year. The predetermined overhead rate per machine hour will be?
-
$9.00
-
$6.80
-
$6.40
-
$3.40
-
$8.20
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