Allocating Manufacturing Overhead: 동영상 및 연습문제
Allocating Manufacturing Overhead is the process of assigning indirect manufacturing costs to jobs based on their use of an activity base. An activity base is a measurable driver of production, such as machine hours or direct labor hours, chosen because it reflects the work required by different jobs. The key idea is to compare a job’s activity use to the company’s total activity base so overhead is assigned more accurately than simply splitting costs evenly.
A central tool is the predetermined overhead rate, an estimated rate set before production begins. It is calculated as \( \text{Predetermined Overhead Rate}=\frac{\text{Estimated Total Overhead Costs}}{\text{Estimated Total Activity Base}} \) . Overhead is then applied to a job using \( \text{Applied Overhead}=\text{Predetermined Overhead Rate}\times\text{Activity Used by the Job} \) , and combined with direct materials and direct labor to determine total job cost and unit cost.
Activity Base & Activity Use
Activity Base & Activity Use
Oak-ay Furniture Company uses a job order costing system to track the cost of each piece of furniture it builds. To fully understand its costs, the company wants to use an activity base that reflects the work required for each job.
Which of the following would be the most appropriate activity base?
Number of employees in the company.
Direct labor hours spent on each job.
The color of the wood stain used.
The number of furniture stores in the city.
Allocating Overhead & Predetermined Overhead Rate
Allocating Overhead & Predetermined Overhead Rate
Prisca’s Print Shop plans to calculate a predetermined overhead rate using machine hours as the activity base.
Managers estimate the following manufacturing overhead costs for the month:
The printing facility lease will cost \$48,000, utilities for the presses are expected to be \$12,000, maintenance for the printing equipment will cost \$9,000, and the factory supervisor’s salary will be \$21,000. The company expects its printing machines to operate 4,500 machine hours during the month.
What is the predetermined overhead rate per machine hour?
\$10 per machine hour.
\$15 per machine hour.
\$20 per machine hour.
\$30 per machine hour.
Applying Overhead & Calculating Total Job Cost & Unit Cost
Applying Overhead & Calculating Total Job Cost & Unit Cost
Prisca’s Print Shop applies manufacturing overhead using a predetermined overhead rate of \$20 per machine hour.
The company is currently calculating the unit cost for Job #204, which involves printing 500 custom event posters for a local business. Job #204 will require 120 machine hours. It will also incur the cost of specialty paper of \$1,200, as well as ink and printing plates of \$300. Direct labor on this job is estimated to cost \$2,000.
Using the company’s predetermined overhead rate, what is the unit cost to produce one poster in Job #204?
\$6.40 per poster.
\$11.80 per poster.
\$13.00 per poster.
\$14.80 per poster.
학생들이 이 주제에 대해 묻는 질문은 다음과 같습니다:
The predetermined overhead rate is an estimated rate used to assign manufacturing overhead costs to jobs before production begins. It helps allocate indirect costs based on an activity base, such as machine hours or labor hours. The formula to calculate the predetermined overhead rate is:
This rate tells us how much overhead cost to assign per unit of activity, like per machine hour. For example, if estimated overhead is \$120,000 and estimated machine hours are 6,000, the predetermined overhead rate would be \$20 per machine hour. This rate is then used to apply overhead costs to individual jobs based on their actual activity use.
To apply manufacturing overhead to a specific job, you multiply the predetermined overhead rate by the actual amount of the activity base used by that job. The formula is:
For example, if the predetermined overhead rate is \$20 per machine hour and a job uses 50 machine hours, the applied overhead would be \$1,000. This applied overhead is then added to direct materials and direct labor costs to find the total cost of the job.
An activity base is a measurable factor that drives the allocation of manufacturing overhead costs to jobs. It reflects the amount of production activity, such as machine hours, labor hours, or production cycles. Choosing the right activity base is important because it ensures overhead costs are assigned more accurately based on how much each job uses the company's resources. For example, a vehicle manufacturer might use machine hours, while a hospital might use operating room hours. The activity base helps compare a job's activity use to the total activity, allowing for fair and precise overhead allocation rather than simply splitting costs evenly.
After applying overhead to a job, the total cost is calculated by adding the applied overhead to the direct materials and direct labor costs. The formula is:
To find the unit cost, divide the total job cost by the number of units produced:
For example, if the total job cost is \$4,500 and 500 units are produced, the unit cost is \$9 per unit. This helps in pricing decisions to ensure costs are covered and profit is made.
Allocating overhead costs equally among jobs ignores the actual use of resources by each job and can lead to inaccurate product costing. Different jobs consume different amounts of overhead activities, such as machine hours or labor hours. For example, a small job like making mopeds uses fewer labor hours than making semi trucks. If overhead is split equally, smaller jobs may be overcosted and larger jobs undercosted. Using an activity base to allocate overhead based on actual activity use ensures costs are assigned fairly and reflect the true consumption of resources, leading to better pricing and profitability analysis.
