Week 2, LO 3 Demo

Week 2, LO 3 Demo - Week 2: Systems Design: Job-Order...

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Week 2: Systems Design: Job-Order Costing Week 2 Skill Building Demonstration Problem 3 << Bac k Next >> Page 6 of 13 Compute the predetermined overhead rates and explain why estimated overhead costs (rather than actual overhead costs) are used in a job-costing process . Learning Objective 3 Application of Manufacturing Overhead Product costs include manufacturing overhead, direct materials and direct labor. Assigning manufacture overhead to a specific job can be difficult for the following reasons: 1. It is impossible or difficult to trace specific overhead costs to particular jobs. 2. Manufacturing overhead consists of many different items ranging from the grease used in machines to a production manager’s salary. 3. Many types of manufacturing overhead costs are fixed even though output fluctuates during the period. 4. Actual amount of overhead will not be known until the end of the period. *Because of these factors, overhead is assigned (allocated) to
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This note was uploaded on 04/21/2011 for the course ACTG 211 taught by Professor Staff during the Spring '08 term at Ill. Chicago.

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Week 2, LO 3 Demo - Week 2: Systems Design: Job-Order...

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