TieuChiPhanBoCP - Subject Managerial Accounting Lecturer...

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Subject: Managerial Accounting Lecturer: Tran Duy Thuc List Group: 1. Nguyen Thuy Tram Anh 2. Le Van Nga 3. Dang Thanh Ngan 4. Nguyen Lieu Thuy Ngan Question: Distribution costing includes: + Direct labor salary; + Direct labor hours; + Hours of machine running. When the firms uses one of them and why? Answer: The direct labor cost method uses the amount of direct labor cost that has been charged to the product as the basis for applying factory overhead. The direct labor hour method overcomes the problem of varying wage rates inherent in the direct labor cost method by using only the number of direct labor hours spent on the job as the basis for applying overhead. The machine hour method uses the number of machine hours that have been worked on the job or process as the basis for applying factory overhead.
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Small businesses that use job-order costing systems need to determine an allocation base to apply manufacturing overhead to jobs. Manufacturing overhead costs, those costs that are not directly traceable to products, can be a large portion of manufacturing expenses. Because of this, choosing an allocation base that closely mirrors how overhead costs are incurred on the production floor is crucial. Many companies choose direct labor hours to allocate costs, but this might not always be the best choice. Understanding some of the other
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  • Summer '14
  • NHATPHUONGCHAM
  • Managerial Accounting, Salary, Nguyen Lieu Thuy Ngan, Nguyen Thuy Tram Anh

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