When applying manufacturing costs to products using a job-order costing system, it is easy to apply the
Question:
When applying manufacturing costs to products using a job-order costing system, it is easy to apply the direct costs (direct materials and direct labor) to a specific job. Manufacturing overhead (factory security guards, factory janitorial services, plant manager, machine maintenance, etc.) are all costs that must be covered for the company to remain profitable, but they can't be traced to a specific product. These costs are, therefore, allocated to jobs based on some allocation basis, such as direct labor hours, or machine hours. Allocation is based on estimates of the total manufacturing overhead and estimates of the basis for the allocation. A new boss comes in (no managerial accounting training) and tells you that you can't just use "made up" numbers to assign costs. Explain to your new boss why it's important to assign the manufacturing overhead to products and the rational way it is done.
Respond to at least two of your classmates' postings by assuming the role of the new boss and argue against the explanation your classmate provided.