Al Zahra Company manufactures a nutrient, Everlife, through two manufacturing processes: Blending and Packaging. All materials are entered at the beginning of each process. On March 1, 2019, inventories consisted of Raw Materials $5,000, Work in Process – Blending $0, Work in Process – Packaging $3,945, and Finished Goods $7,500. The beginning inventory for Packaging consisted of 500 units, two-fifths complete as to conversion costs and fully complete as to materials. During March, 9,000 units were started into production in Blending, and the following transactions were completed. 1. Purchased $52,000 of raw materials on account. 2. Issued raw materials for production: Blending $28,930 and Packaging $10,140. 3. Incurred labour costs of $33,770. 4. Used factory labour: Blending $15,320 and Packaging $10,450. 5. Incurred $47,500 of manufacturing overhead on account. 6. Applied manufacturing overhead at the rate of $35 per machine hour. Machine hours were Blending 900 and Packaging 300. 7. Transferred 8,200 units from Blending to Packaging at a cost of $44,940. 8. Transferred 8,600 units from Packaging to Finished Goods at a cost of $77,490. 9. Sold goods costing $82,000 for $99,000 on account. Instructions Journalize the August transactions.
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.
Instructions
Journalize the August transactions.
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