Product costing: ZamGabra Manufacturing Company
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a) In job order cost systems, actual direct materials and actual direct labour are charged to the work in process account; however, an estimated amount of overhead is charged to the account. Why is overhead accounted for differently than the other costs of production? Provide an example.
b) On December 31, 2012, ZamGabra Manufacturing Company reported the following balances in its inventory accounts: (see the attached file).
Prepare ZamGabra's schedule of cost of goods manufactured and sold for 2012.
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Solution Summary
This solution is 148 words about why overhead must be estimated and a spreadsheet showing the cost of goods manufactured scheduled in classic format.
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(a) Overhead is not job specific and so it is hard to identify with any particular job. Materials and labor are direct costs and so can be assigned to the job that that used those materials and those specific labor ...
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