August 1 Balances $270,000 Vault Bank Take Off Airlines 80,000 Sleepy Tired Hotels Tastee Beverages 210,000 115,000 Total $675,000 During August, The Fly Company incurred the following direct labor and media pur- chase costs related to preparing advertising for each of the four accounts: Direct Labor Media Purchases $ 190,000 $ 710,000 Vault Bank Take Off Airlines 85,000 625,000 Sleepy Tired Hotels Tastee Beverages 372,000 455,000 421,000 340,000 Total $1,068,000 $2,130,000
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.
The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space).
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At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.
Journalize the summary entry to record each of the following for the month:
a. Direct labor costs
b. Media purchases
c. Overhead applied
d. Completion of Vault Bank and Take Off Airlines campaigns
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