Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories: Finished Goods $13,500 Work in Process—Making 6,790 Work in Process—Packing 7,350 Materials 5,100 Departmental accounts are maintained for factory overhead, which both have zero balances on July 1. Manufacturing operations for July are summarized as follows: a. Materials purchased on account $149,800 b. Materials requisitioned for use Phosphate—Making Department $105,700 Packaging—Packing Department 31,300 Indirect materials—Making Department 4,980 Indirect materials—Packing Department 1,530 c. Labor used Direct labor—Making Department $32,400 Direct labor—Packing Department 40,900 Indirect labor—Making Department 15,400 Indirect labor—Packing Department 18,300 d. Depreciation charged on fixed assets Making Department $10,700 Packing Department 7,900 e. Expired prepaid factory insurance Making Department $2,000 Packing Department 1,500 f. Applied factory overhead Making Department $32,570 Packing Department 30,050 g. Production costs transferred from Making Department to Packing Department $166,790 h. Production costs transferred from Packing Department to Finished Goods $263,400 i. Cost of goods sold during the period $265,200 Required: 1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.
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.
Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:
| Finished Goods | $13,500 |
| Work in Process—Making | 6,790 |
| Work in Process—Packing | 7,350 |
| Materials | 5,100 |
Departmental accounts are maintained for factory
Manufacturing operations for July are summarized as follows:
| a. | Materials purchased on account | $149,800 | |
| b. | Materials requisitioned for use | ||
| Phosphate—Making Department | $105,700 | ||
| Packaging—Packing Department | 31,300 | ||
| Indirect materials—Making Department | 4,980 | ||
| Indirect materials—Packing Department | 1,530 | ||
| c. | Labor used | ||
| Direct labor—Making Department | $32,400 | ||
| Direct labor—Packing Department | 40,900 | ||
| Indirect labor—Making Department | 15,400 | ||
| Indirect labor—Packing Department | 18,300 | ||
| d. | |||
| Making Department | $10,700 | ||
| Packing Department | 7,900 | ||
| e. | Expired prepaid factory insurance | ||
| Making Department | $2,000 | ||
| Packing Department | 1,500 | ||
| f. | Applied factory overhead | ||
| Making Department | $32,570 | ||
| Packing Department | 30,050 | ||
| g. | Production costs transferred from Making Department to Packing Department | $166,790 | |
| h. | Production costs transferred from Packing Department to Finished Goods | $263,400 | |
| i. | Cost of goods sold during the period | $265,200 |
Required:
1.
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2. Compute the July 31 balances of the inventory accounts.
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