A business produces its products by a continuous process involving three production departments, #1 through #3. Present journal entries to record the following selected transactions related to production during August: (a) Materials purchased on account, $130,000. (b) Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product. (c) Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product. (d) Factory overhead costs for Department 1 incurred on account, $52,700. (e) Depreciation on machinery in Department 1, $29,200. (f) Expiration of prepaid insurance chargeable to Department 1, $7,000. (g) Factory overhead applied to production, $105,300. (h) Output of Department 1 transferred to Department 2, $362,700.
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.
A business produces its products by a continuous process involving three production departments, #1 through #3. Present
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(a) |
Materials purchased on account, $130,000. |
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(b) |
Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product. |
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(c) |
Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product. |
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(d) |
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(e) |
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(f) |
Expiration of prepaid insurance chargeable to Department 1, $7,000. |
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(g) |
Factory overhead applied to production, $105,300. |
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(h) |
Output of Department 1 transferred to Department 2, $362,700. |
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JOURNAL
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(b) |
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(c) |
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(d) |
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(e) |
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(g) |
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(h) |
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