Week 2 Discussion Job Order Process 2

Week 2 Discussion Job Order Process 2 - hours as the...

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Absolutely Troy! Labor costs are a common base used when calculating overhead rate. The source below explains that in order to successfully allocate overhead costs is to select an allocation base. Along with labor costs, machine hours and labor hours may be used as the allocation base when calculating overhead rate. A factor that would indicate the use of machine
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Unformatted text preview: hours as the allocation base is if the company only manufactures a single product. The labor hours or machine hours are then used in the denominator of the formula as follows: Predetermined Overhead Rate = Estimated total overhead cost / Estimated total units in the allocation base. Source: http://www.accountingformanagement.com/job_order_costing_system.htm...
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This note was uploaded on 03/26/2012 for the course AC505 AC505 taught by Professor Dillan during the Spring '10 term at Keller Graduate School of Management.

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