Analyzing Manufacturing Cost Accounts Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May: Materials May 1 Balance 28,900 May 31 Requisitions (a) 31 Purchases 115,900 Work in Process May 1 Balance (b) 31 Completed jobs (f) 31 Materials (c) 31 Direct labor (d) 31 Factory overhead applied (e) Finished Goods May 1 Balance 0 May 31 Cost of goods sold (g) 31 Completed jobs (f) Wages Payable May 31 Wages incurred 123,800 Factory Overhead May 1 Balance 22,700 May 31 Factory overhead applied (e) 31 Indirect labor (h) 31 Indirect materials 15,400 31 Other overhead 109,600 In addition, the following information is available: Materials and direct labor were applied to the following jobs in May: Job No. Style Quantity Direct Materials Direct Labor 101 AF1 220 $21,680 $16,000 102 AF3 400 33,100 26,000 103 AF2 200 13,200 8,000 104 VY1 280 31,460 29,000 105 VY2 180 19,080 17,000 106 AF4 100 4,800 3,000 Total 1,380 $123,320 $99,000 Factory overhead is applied to each job at a rate of 170% of direct labor cost. The May 1 Work in Process balance consisted of two jobs, as follows: Job No. Style Work in Process,May 1 101 AF1 $6,400 102 AF3 16,300 Total $22,700 Customer jobs completed and units sold in May were as follows: Job No. Style Completed inMay Units Soldin May 101 AF1 X 176 102 AF3 X 320 103 AF2 0 104 VY1 X 235 105 VY2 X 149 106 AF4 0 Required: 1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers. Job No. Quantity May 1Work inProcess DirectMaterials DirectLabor FactoryOverhead Total Cost Unit Cost Units Sold Cost of Goods Sold No. 101 $ 6,400 $ 21,680 $ 16,000 $ $ $ $ No. 102 16,300 33,100 26,000 No. 103 13,200 8,000 No. 104 31,460 29,000 No. 105 19,080 17,000 No. 106 4,800 3,000 Total $22,700 $123,320 $99,000 $ $ $ a. Materials Requisitions $ b. Work in Process Beginning Balance $ c. Direct Materials $ d. Direct Labor $ e. Factory overhead applied $ f. Completed jobs $ g. Cost of goods sold $ h. Indirect labor $ 2. Determine the May 31 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances. Materials $ Work in Process $ Finished Goods $ Factory Overhead $
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.
Analyzing
Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May:
| Materials | |||||
|---|---|---|---|---|---|
| May 1 | Balance | 28,900 | May 31 | Requisitions | (a) |
| 31 | Purchases | 115,900 |
| Work in Process | |||||
|---|---|---|---|---|---|
| May 1 | Balance | (b) | 31 | Completed jobs | (f) |
| 31 | Materials | (c) | |||
| 31 | Direct labor | (d) | |||
| 31 | Factory |
(e) |
| Finished Goods | |||||
|---|---|---|---|---|---|
| May 1 | Balance | 0 | May 31 | Cost of goods sold | (g) |
| 31 | Completed jobs | (f) |
| Wages Payable | |||||
|---|---|---|---|---|---|
| May 31 | Wages incurred | 123,800 | |||
| Factory Overhead | |||||
|---|---|---|---|---|---|
| May 1 | Balance | 22,700 | May 31 | Factory overhead applied | (e) |
| 31 | Indirect labor | (h) | |||
| 31 | Indirect materials | 15,400 | |||
| 31 | Other overhead | 109,600 |
In addition, the following information is available:
- Materials and direct labor were applied to the following jobs in May:
Job No. Style Quantity Direct Materials Direct Labor 101 AF1 220 $21,680 $16,000 102 AF3 400 33,100 26,000 103 AF2 200 13,200 8,000 104 VY1 280 31,460 29,000 105 VY2 180 19,080 17,000 106 AF4 100 4,800 3,000 Total 1,380 $123,320 $99,000 - Factory overhead is applied to each job at a rate of 170% of direct labor cost.
- The May 1 Work in Process balance consisted of two jobs, as follows:
Job No. Style Work in Process,
May 1101 AF1 $6,400 102 AF3 16,300 Total $22,700 - Customer jobs completed and units sold in May were as follows:
Job No. Style Completed in
MayUnits Sold
in May101 AF1 X 176 102 AF3 X 320 103 AF2 0 104 VY1 X 235 105 VY2 X 149 106 AF4 0
Required:
1. Determine the missing amounts associated with each letter and complete the following table. If required, round amounts to the nearest dollar. If an answer is zero, enter in "0". Enter all amounts as positive numbers.
| Job No. | Quantity | May 1 Work in Process |
Direct Materials |
Direct Labor |
Factory Overhead |
Total Cost | Unit Cost | Units Sold | Cost of Goods Sold | ||||||||
| No. 101 | $ 6,400 | $ 21,680 | $ 16,000 | $ | $ | $ | $ | ||||||||||
| No. 102 | 16,300 | 33,100 | 26,000 | ||||||||||||||
| No. 103 | 13,200 | 8,000 | |||||||||||||||
| No. 104 | 31,460 | 29,000 | |||||||||||||||
| No. 105 | 19,080 | 17,000 | |||||||||||||||
| No. 106 | 4,800 | 3,000 | |||||||||||||||
| Total | $22,700 | $123,320 | $99,000 | $ | $ | $ |
a. Materials Requisitions $
b. Work in Process Beginning Balance $
c. Direct Materials $
d. Direct Labor $
e. Factory overhead applied $
f. Completed jobs $
g. Cost of goods sold $
h. Indirect labor $
2. Determine the May 31 balances for each of the inventory accounts and factory overhead. Use the minus sign to indicate any credit balances.
| Materials | $ |
| Work in Process | $ |
| Finished Goods | $ |
| Factory Overhead | $ |
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