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13 January, 06:17

What do you think would be the greatest challenge in maintaining a Job-Order Costing system for a manufacturing company?

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  1. 13 January, 06:41
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    To calculate the predetermine overhead rate

    Explanation:

    As we know that

    Predetermined overhead rate = (Total estimated manufacturing overhead) : (estimated direct labor-hours or estimated machine hours)

    Plus if we talk about the manufacturing overhead, it is an indirect cost which could not be easy to trace the cost to a specific job or task

    And the fixed cost would remain unchanged although the number of production units changes and the average cost per unit also changes due to changes in the production level

    These reasons could be the greatest challenge.
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