2 54 Job Order Cost Accounting Overhead is applied based on the number of days

2 54 job order cost accounting overhead is applied

This preview shows page 54 - 55 out of 55 pages.

Background image
Job Order Cost AccountingOverhead is applied based on the number of days a gown is in process. Usually, five gowns are being worked on at a time. Therefore, each gown is charged 1/5 of a daily estimated overhead amount.Customer Ruth Finney's wedding dress took four days to complete. However, after the first three days had elapsed, Diane Lange, a movie personality, suddenly decided to get married, and ordered a very lavish gown. All other work was suspended, and the work on Ms. Finney's dress was delayed six days. The final day of its construction was on the tenth day after it had been begun.Required:You are the accounting manager for Bridal Treasures. Write a memo to the billing department. Instruct them as to the appropriate number of overhead days to charge to Ms. Finney's account.Solution 144TO:Billing DepartmentFROM: M. Long, Accounting ManagerRE:Overhead billing, Finney accountAs you know, our standard procedure in billing overhead is to simply multiply our daily overhead rate by the number of days the gown was in our possession. However, for the Finney gown, and any other jobs we suspended for the Diane Lange gown, we should not charge for the days the gowns were in our possession but not being worked on.We should adjust the billing for the Diane Lange gown, so that it absorbs the full daily cost of overhead, since it actually was the only job worked on during those six days. The Finney job should be charged only four days of overhead. Other suspended jobs should be treated similarly.Please call if you have questions.(signed)2-55
Background image

You've reached the end of your free preview.

Want to read all 55 pages?

  • Spring '11
  • Hernandez
  • Cost Accounting, ........., Factory Labor, Process Inventory, job order cost

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes