English ENG 1310 Lecture Notes - Lecture 5: Direct Labor Cost, Cost Driver

• School: Texas State University
• Department: English
• Course: English ENG 1310
• Professor: Graeme B Mullen

Document Summary

Overhead costs are indirect costs making it difficult or impossible to trace, it also consists of many different things from grease to manager salary, and finally its output can be easily influenced by seasons or outside factors. The job sheet helps organize each job by recording materials, labor, and overhead costs to that particular job. Job-order costing system is for creating many different products in each period. The predetermined overhead rate is an estimate of the overhead applied to a job. It is computed by dividing estimated total manufacturing overhead costs by estimated total units in the allocation base. If actual overhead are used often, then seasonal factors or fluctuations will throw off overhead rates. The base that should be used should be the cost driver which is the factor that originally causes the overhead costs.