4.2C Company uses job-order costing. It applies overhead cost to jobs on the basis of direct laborhours.Thefollowingtransactionstookplaceduringtheyear: a) $300,000 of raw materials were purchased on account b) Raw materials were issued into production: $90,000 direct materials and $40,000 indirect materials c) Labor costs incurred: $40,000 direct, $130,000 indirect, sales commissions $50,000, administrative salaries $100,000 d) Utility costs for the factory were $60,000 e) Depreciation recorded was $300,000 (70% related to factory; 30% related to administrative offices) f) Manufacturing overhead of $715,000 was applied to production. Actual direct labor-hours incurred were 22,000. g) Jobs costing $300,000 were completed and transferred into the finished goods inventory. h) Jobs with a cost of $150,000 were sold on account for $200,000.i) Closed the under/over applied overhead for the year. Required: Prepare the necessary journal entries and summarize their balance using T-Account
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.
4.
2C Company uses job-order costing. It applies
The
following
transactions
took
place
during
the
year:
a) $300,000 of raw materials were purchased on account
b) Raw materials were issued into production: $90,000 direct materials and $40,000 indirect materials
c) Labor costs incurred: $40,000 direct, $130,000 indirect, sales commissions $50,000, administrative
salaries $100,000
d) Utility costs for the factory were $60,000
e)
f) Manufacturing overhead of $715,000 was applied to production. Actual direct labor-hours incurred
were 22,000.
g) Jobs costing $300,000 were completed and transferred into the finished goods inventory.
h) Jobs with a cost of $150,000 were sold on account for $200,000.
i) Closed the under/over applied overhead for the year.
Required: Prepare the necessary journal entries and summarize their balance using T-Account
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