[bbrunfast]

I am having a hard time understanding the difference between job costing, normal costing and actual costing. I have the following problem I am working on

For 2008 Dee's manufacturing uses machine hours as the only overhead cost allocation base. The accont records contain the following information

Manufacturing overhead costs-- Estimated $100,000
Manufacturing overhead costs-- Actual-----$120,000
Machine hours---------------------Estimated 20,000
Machine hours---------------------Actual 25,000

Using job costing the 2008 budgeted manufacturing overhead rate is?

a. $4.00
b. $4.80 120,000/25,000= $4.80
c. $5.00 100,000/20,000= $5.00
d. $6.00
I believe its either b or c but not sure which one.

[morgaine300]

I kind of don't get their categorizations for the costing types. Job costing means it's done job-by-job, versus process costing that is like a continuous process (like filling Pepsi bottles.) The different types of costing like what you're referring to are standard, normal and actual. (Although books can call things by different names.) Standard costing uses estimates, but it's not asking specifically for standard costing.

However, since it says the budgeted amount for overhead, that's implying doing an estimate ahead of time. You would never use actual costs to make a budget, because you don't have them yet at the time you do the budget. (Though they would be estimated based on prior actual costs.) So I'm presuming use the estimated, which is C.