ACCT 2302 Chapter 2 Notes
ACCT 2302 Chapter 2 Notes ACCT 2302
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This 2 page Class Notes was uploaded by Malvi Mehta on Sunday February 7, 2016. The Class Notes belongs to ACCT 2302 at University of Texas at Dallas taught by in Spring 2016. Since its upload, it has received 30 views. For similar materials see INTRO TO MANAGERIAL ACCOUNTING in Accounting at University of Texas at Dallas.
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Date Created: 02/07/16
ACCT 2302 – Managerial Accounting Chapter 2 Notes Joborder Costing Used when many different products, each with individual and unique features, are produced each period Direct materials and direct labor can be traced to a specific “job” Manufacturing overhead are allocated to all “jobs” (cannot be traced) o Allocation base: used to assign manufacturing overhead to individual jobs o Predetermined Overhead Rate (POHR): used to apply overhead to jobs; is determined before the period begins POHR = _____Estimated total manufacturing__ overhead cost Estimated total units in allocation base Example problem: A job required $200 of direct materials and 10 direct labor hours at $15/hour. Estimated total overhead was $760,000 and estimated direct labor hours were 20,000. What is the total cost of the job? POHR = $760,000/20,000 = $38 Direct materials $200 + Direct labor $150 (10*$15) + Manufacturing overhead $380 (10*$38) = Total cost = $730 Flow of Costs o Material purchases Raw materials o Direct Labor Work in process Finished goods Cost of goods sold Accounting for nonmanufacturing costs o Nonmanufacturing costs are not assigned to individual jobs – rather they are expensed in the period incurred Ex. Salary expense of employees working in marketing/selling/administration Ex. Advertising expenses Underapplied Overhead: the amount of overhead applied to jobs using the POHR is LESS THAN the total amount of overhead actually incurred during the period Overapplied Overhead: the amount of overhead applied to jobs using the POHR is MORE THAN the total overhead actually incurred during the period Example problem: Company A’s actual overhead for the year was $650,000 with a total of 170,000 direct labor hours. How much total overhead was applied to Company A’s jobs during the year? Given: POHR=$4 ($4)(170,000) = $680,000 $680,000>$650,000 therefore OVERAPPLIED!
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