Finished Goods (FG) Inventory Factory Overhead April 30 57,000 Cost of goods sold Cost of goods manuf. May 31 57,000 Income statement (partial) April 30 May 31 Inventories Raw materials Work in process Finished goods $ 40,000 9, 200 57,000 58,000 20,500 33,300 Activities and information for May Raw materials purchases (paid with cash) Factory payroll (paid with cash) Factory overhead 177,000 100,000 Indirect materials 15,000 Indirect labor Other overhead costs 23,000 97,500 Sales (received in cash) Predetermined overhead rate based on direct labor cost 1,100,000 55% Compute the following amounts for the month of May using T-accounts. 1. Cost of direct materials used. 2. Cost of direct labor used. 3. Cost of goods manufactured. 4. Cost of goods sold.* 5. Gross profit. 6. Overapplied or underapplied overhead. *Do not consider any underapplied or overapplied overhead. Raw Materials (RM) Work in Process (WIP) 15,000 Indirect materials April 30 RM purchases 40,000 April 30 9,200 177,000 144.000 DM used DM used 144,000 DL used 77,000 Overhead applied May 31 ............ May 31 58,000 230,200
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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