Bonita Church Furniture manufactures custom pews, altars, and pulpits for churches across the southern United States. Since ea order is unique, Bonita uses a job order costing system. During the month of June, Bonita worked on orders for three churches: Church, Grace Church, and Hope Church. Production on the Faith and Grace orders began in May, and the Faith job was complet June. Production on the Hope order began in June and was incomplete at the end of the month. Bonita applies overhead to each based on machine hours. Prior to the year, managers had estimated manufacturing overhead at $864,000, along with 24,000 ma hours. Additional cost information related to the three orders is as follows: Faith Grace Hope Beginning balance, June 1 $4,500 $2,600 Direct materials, June $8,000 $6,500 $3,600 Direct labor, June $13,400 $7,200 $5,900 Manufacturing OH, June ? ? Machine hours, June 2,100 1,400 1,500
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.
Bonita's predetermined
Manufacturing overhead:
Faith: $ 75,600
Grace: $ 50,400
Hope: $ 54,000
What is the balance in Bonita's Work in Process Inventory account at the end of June?
Solution:
Ending balance in work in process inventory is based on incomplete jobs at the end of the months. The total costs assigned to incomplete job at end are the balance of work in process inventory at the end.
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