ayward Company, a manufacturing firm, has supplied the following information from its accounting records for the month of May: Direct labor cost $10,500 Purchases of raw materials 15,000 Supplies used 675 Factory insurance 350 Commissions paid 2,500 Factory supervision 2,225 Advertising 800 Material handing 3,750 Materials inventory, May 1 3,475 Work-in-process inventory, May 1 12,500 Finished goods inventory, May 1 6,685 Materials inventory, May 31 9,500 Work-in-process inventory, May 31 14,250 Finished goods inventory, May 31 4,250 Required: 1. Prepare a statement of cost of goods manufactured. 2. Prepare a statement of cost of goods sold.
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.
| Direct labor cost | $10,500 |
| Purchases of raw materials | 15,000 |
| Supplies used | 675 |
| Factory insurance | 350 |
| Commissions paid | 2,500 |
| Factory supervision | 2,225 |
| Advertising | 800 |
| Material handing | 3,750 |
| Materials inventory, May 1 | 3,475 |
| Work-in-process inventory, May 1 | 12,500 |
| Finished goods inventory, May 1 | 6,685 |
| Materials inventory, May 31 | 9,500 |
| Work-in-process inventory, May 31 | 14,250 |
| Finished goods inventory, May 31 | 4,250 |
| Required: | |
| 1. | Prepare a statement of cost of goods manufactured. |
| 2. | Prepare a statement of cost of goods sold. |
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