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Does A credit balance in the Manufacturing Overhead account at the end of the year means that overhead was underapplied?
Wiki User
∙ 13y ago
It means there is some WIP
Wiki User
∙ 13y ago
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A debit balance in the manufacturing overhead account at year end means?
It means you have incurred more actual manufacturing overhead costs than you have applied to your products (i.e., manufacturing overhead is underapplied).
In a process costing system what account is debited when manufacturing overhead costs are applied to the cost of production?
the finished goods inventroy account
Do you list property tax as factory overhead?
No, property taxes would not be classified as factory overhead...property taxes get paid under an expense account
Is a manufacturing plant managers salary a direct labor cost?
Manufacturing plant manager is not directly related to manufacture of unit of product that's why it is not direct labor cost instead of that it is indirect cost and goes to overhead account
Under-over absorption of overheads how is it treated in cost accountancy?
The absorbed overhead is part of the production cost of the cost units and therefore it is debited to the work-in-progress control account together with the direct materials, direct labour and any direct expenses incurred, to give the total production cost for the period. The credit entry is the production overhead control account which will have been debited with the actual overhead incuured. Any balance on the production overhead control account is the transfer to the income statement as under or over-absorbed overhead.
A debit balance in the manufacturing overhead account at year end means?
It means you have incurred more actual manufacturing overhead costs than you have applied to your products (i.e., manufacturing overhead is underapplied).
Is manufacturing overhead an expense account?
No. It is a manufacturing control account that increases with debits and decreases with credits.
When manufacturing overhead is applied to production is added to?
the Work in Process account
In a process costing system what account is debited when manufacturing overhead costs are applied to the cost of production?
the finished goods inventroy account
Do you list property tax as factory overhead?
No, property taxes would not be classified as factory overhead...property taxes get paid under an expense account
Is a manufacturing plant managers salary a direct labor cost?
Manufacturing plant manager is not directly related to manufacture of unit of product that's why it is not direct labor cost instead of that it is indirect cost and goes to overhead account
Under-over absorption of overheads how is it treated in cost accountancy?
The absorbed overhead is part of the production cost of the cost units and therefore it is debited to the work-in-progress control account together with the direct materials, direct labour and any direct expenses incurred, to give the total production cost for the period. The credit entry is the production overhead control account which will have been debited with the actual overhead incuured. Any balance on the production overhead control account is the transfer to the income statement as under or over-absorbed overhead.
What is the difference in the flow of costs between manufacturing and service organizations?
In a service organisation which uses job-order costing, the cost of inputs brought from outside (subcontracted work) is comparable to the cost of direct materials used in a manufacturing organisation. Similarly, the direct staff costs in a service organisation correspond with the direct labour costs in a manufacturing organisation. The office overhead expenses in a service organisation is similar to the manufacturing overhead in a manufacturing organisation. The cost of any completed work is simlar to the cost of finished goods inventory in a manufacturing organisation. Basically the names of the accounts used in a service organisation are different to those used in a manufacturing organisation. The work-in-process account in a service organisation would therefore have cost of subcontracted work, direct staff cost and office overhead cost on the debit side; the cost of completed work would be on the credit side. Other than the terminology, everything else in the flow of costs remains the same. The pre-determined overhead rate can be calculated by using an overhead allocation base such as direct staff costs and each completed job can be allocated with the appropriate portion of the estimated overhead based on the actual direct staff costs incurred on the project.
Difference between trading and manufacturing account?
A Trading Account is a Final and financial statement drawn by a firm at the end of their accounting period showing the relationship that existed between their Sales volume and Purchases and the Gross profit or loss arrived. When Net Sales exceeds the Cost of Sales then there is Gross Profit. However, if the Cost of Sales exceeds the Net Sale(Sales less Return Inwards) then there is Gross loss. A Manufacturing Account is part of the Final accounts drawn by a manufacturing entity before drawing the Trading Account. Since the firm is engaged in the manufacturing or converting of raw materials to finished goods,they express the monetary value of Prime Cost(Direct Materials + Direct Labour + Direct Expense) and Overheads( Sum of all Indirect cost) to determine the cost of Production. The manufacturing account is used to generate the Total Cost which is the sum of the cost of production, Selling and distribution overhead, production overhead and Administration overheads .
In a job order costing system when overhead costs are applied do they increase the Work in process Inventory account?
true
Are the direct labor and overhead costs of providing services to clients accumulated in a work in process account?
Yes. True.
How does one work out the cost of a product in detail?
One uses absorption costing taking into account direct and indirect materials labour and overhead.
