ABC Company employs a job-order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations: 1 Direct materials requisition during the month: Job 56 Job 57 Job 58 2 Direct labour incurred and charged to jobs was: Job 56 Job 57 Job 58 4 Actual manufacturing overhead costs totalled: $10,000 $14,000 $16.000 5 Job 56 consisting of Job 58 consisting of These jobs were completed during the month. $40,000 $12,000 $16,000 $18.000 3 Manufacturing overhead was applied based on 75% of direct labour costs. $46,000 $36,000 2000 units 400 units Instructions A. Prepare journal entries to record the above transactions. B. How much manufacturing overhead was applied to Job 57 during the month? C. Calculate the unit costs of Jobs 56 and 58. D. What is the balance in Work in Process Inventory at the end of the month? E. Determine if manufacturing overhead was under- or over-applied during the month. By how much?
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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