Crane Company uses a job order cost system. On May 1, the company has balances in Raw Materials Inventory of $15,700 and Work in Process Inventory of $3,770 and two jobs in process: Job No. 429 $2,430, and Job No. 430 $1,340. During May, the company incurred factory labor of $15,440. A summary of source documents reveals the following. Job Number Materials Requisition Slips Labor Time Tickets 429 $2,940 $2,300 430 3,850 3,400 431 4,680 $11,470 8,170 $13,870 General use 940 1,570 $12,410 $15,440 Crane Company applies manufacturing overhead to jobs at an overhead rate of 70% of direct labor cost. Job No. 429 is completed during the month. (a) Record the May 1 inventory balances and the factory labor incurred. (b) Record (1) material usage from requisition slips, (2) factory labor usage from time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429.
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.
Crane Company uses a
|
Job Number |
Materials |
Labor Time |
||||||
|---|---|---|---|---|---|---|---|---|
|
429 |
$2,940 | $2,300 | ||||||
|
430 |
3,850 | 3,400 | ||||||
|
431 |
4,680 | $11,470 | 8,170 | $13,870 | ||||
|
General use |
940 | 1,570 | ||||||
| $12,410 | $15,440 |
Crane Company applies manufacturing
(a) Record the May 1 inventory balances and the factory labor incurred.
(b) Record (1) material usage from requisition slips, (2) factory labor usage from time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429.
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|
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|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Raw Materials Inventory |
Factory Labor |
Manufacturing Overhead |
Work in Process Inventory |
Finished Goods Inventory |
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|
(a) |
Balances |
15700 | 3770 | |||||||||
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(b) |
Incurred factory labor |
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(b) |
Direct materials |
11470 | ||||||||||
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(b) |
Indirect materials |
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(b) |
Direct labor |
13870 | ||||||||||
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(b) |
Indirect labor |
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|
(b) |
Assign Manufacturing overhead |
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(b) |
Completion of job No. 429 |
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|
Balance |
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