3 4 A company that uses job order costing reports the costs incurred below. Overhead is applied at the rate of 60% of direct materials cost. The company has no beginning Work in Process or Finished Goods inventories, Jobs 1 and 3 are not finished by the end of the month, and Job 2 is finished but not sold by month-end 6 7 Direct materials used 8 Direct labor used 9 14 15 Job 1 $5,000 $9,000 24 Work in process inventory 25 10 Required: 11 1. Prepare job cost sheets that have direct materials, direct labor, and overhead applied for each of the three jobs for the month. 12 13 Overhead rate JOB COST SHEET Job 1 60% of dire $5,000 9,000 017-60% Job 2 $17,000 $7,000 $4,000 $15,200 16 17 Direct materials 18 Direct labor 19 Overhead 20 Total 21 22 2. Determine the total dollar amount of Work in Process Inventory at the end of the month. 23 Job 2 Job 3 ials cost $1,500 $3,000 $7,000 4,000 4,200 $15,200 Job 3 $1,500 3,000 900 $5,400 $22,400 26 3. Determine the total dollar amount of Finished Goods Inventory at the end of the month, 27 28 Finished goods inventory
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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