ABC Company uses a job order cost system for its manufacturing activities. The following transaction data were accumulated for the month of June 2021: Jobs in process, June 1: Job 40 P20,000 Job 41 60,000 Raw materials purchased, P720,000 Raw materials and supplies requisitioned from the stockroom Job 40 P100,000
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.
ABC Company uses a
- Jobs in process, June 1:
Job 40 P20,000
Job 41 60,000
- Raw materials purchased, P720,000
- Raw materials and supplies requisitioned from the stockroom
Job 40 P100,000
Job 41 220,000
Job 42 240,000
General factory usage 40,000
P600,000
- Total factory payroll accrued and paid
Job 40 200,000
Job 41 200,000
Job 42 220,000
Direct labor P620,000
Indirect labor 60,000
Payroll deductions
Income tax withheld 5%
SSS contributions P7,500
Phil. Health contributions 2,400
Pag-ibig contributions 2,000
- Employer's share in
SSS contributions P10,200
Phil. Health contributions 2,400
Pag-ibig contributions 2,000
Depreciation of factory equipment and machinery for June, P60,000.- Other overhead costs incurred, P340,000.
- Factory overhead is applied to jobs at the rate of 100 percent of direct labor cost.
- During the month, Job 40 and Job 41 were completed.
- Job 40 was delivered and billed to the customer for P900,000.
Required:
- Prepare general
journal entries for the transactions. - Compute the balance of Work in Process on June 30, 2021.
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