Bergo Bay's accounting system generated the following account balances on December 31. The company’s manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. Debit Credit Cash $ 77,000 Accounts receivable 46,000 Raw materials inventory 28,000 Work in process inventory 0 Finished goods inventory 9,000 Prepaid rent 3,000 Accounts payable $ 11,500 Notes payable 14,500 Common stock 30,000 Retained earnings (prior year) 92,000 Sales 189,000 Cost of goods sold 106,000 Factory overhead 28,000 General and administrative expenses 40,000 Totals $ 337,000 $ 337,000 These six documents must be processed to bring the accounting records up to date. Materials requisition 10: $ 4,800 direct materials to Job 402 Materials requisition 11: $ 7,500 direct materials to Job 404 Materials requisition 12: $ 1,800 indirect materials Labor time ticket 52: $ 5,000 direct labor to Job 402 Labor time ticket 53: $ 15,000 direct labor to Job 404 Labor time ticket 54: $ 5,000 indirect labor Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 150% of direct labor cost. Problem 15-3A (Algo) Part 2 2-a. In Factory Overhead T-account, enter amounts from part 1 related to factory overhead. Determine the amount of over- or underapplied overhead. 2-b. Prepare the entry to close any over- or underapplied overhead to 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.
Problem 15-3A (Algo) Computing and recording job costs ; preparing income statement and balance sheet LO P1, P2, P3, P4
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Bergo Bay's accounting system generated the following account balances on December 31. The company’s manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded.
| Debit | Credit | |
|---|---|---|
| Cash | $ 77,000 | |
| 46,000 | ||
| Raw materials inventory | 28,000 | |
| Work in process inventory | 0 | |
| Finished goods inventory | 9,000 | |
| Prepaid rent | 3,000 | |
| Accounts payable | $ 11,500 | |
| Notes payable | 14,500 | |
| Common stock | 30,000 | |
| 92,000 | ||
| Sales | 189,000 | |
| Cost of goods sold | 106,000 | |
| Factory |
28,000 | |
| General and administrative expenses | 40,000 | |
| Totals | $ 337,000 | $ 337,000 |
These six documents must be processed to bring the accounting records up to date.
| Materials requisition 10: | $ 4,800 | direct materials to Job 402 |
|---|---|---|
| Materials requisition 11: | $ 7,500 | direct materials to Job 404 |
| Materials requisition 12: | $ 1,800 | indirect materials |
| Labor time ticket 52: | $ 5,000 | direct labor to Job 402 |
| Labor time ticket 53: | $ 15,000 | direct labor to Job 404 |
| Labor time ticket 54: | $ 5,000 | indirect labor |
Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 150% of direct labor cost.
Problem 15-3A (Algo) Part 2
2-a. In Factory Overhead T-account, enter amounts from part 1 related to factory overhead. Determine the amount of over- or underapplied overhead.
2-b. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold.
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