Custom Cabinets Inc. (CCI) uses a job-order costing system. During February and March, only 3 jobs were worked on. Job 1602 was completed on March 15th. The other two jobs were still in process at March 31st, CCI's year-end. Here is a summary of the data from the job cost sheets for the 3 jobs: Job 1602 Job 1603 Job 1604 February costs incurred: Direct materials $ 16,000 $ 9,000 $ - Direct labour 13,500 7,300 - Manufacturing overhead 21,600 11,680 - March costs incurred: Direct materials - 8,400 21,000 Direct Labour 4,000 5,800 10,300 Manufacturing overhead ? ? ? Manufacturing overhead is applied to jobs on the basis of direct labor cost. Balances in the inventory accounts at the end of February were as follows: Raw Materials $ 40,000 Work in Process ? Finished goods 85,000 1.What is the February 28th work in process balance? Assume no over/under applied manufacturing overhead. 2.What is the predetermined overhead rate that CCI uses to apply manufacturing overhead? What manufacturing overhead was applied to the 3 jobs in March? 3.If CCI incurred actual manufacturing overhead of $4,000 in indirect materials, $8,200 in indirect labor, and $20,500 in other various manufacturing overhead costs, what was the over/underapplied overhead for March? 4.What is the Raw Materials ending inventory balance at the end of March assuming CCI did not make any raw material purchases during December? 5.Assume that, during March, CCI sold goods costing $45,000. What is the finished goods inventory balance at the end of March? 6.What is the Work-in-Process Inventory ending balance on March 31st? Assume over/underapplied inventory is closed out to the 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.
Custom Cabinets Inc. (CCI) uses a job-order costing system. During February and March, only 3 jobs were worked on. Job 1602 was completed on March 15th. The other two jobs were still in process at March 31st, CCI's year-end. Here is a summary of the data from the
| Job 1602 | Job 1603 | Job 1604 | |
| February costs incurred: | |||
| Direct materials | $ 16,000 | $ 9,000 | $ - |
| Direct labour | 13,500 | 7,300 | - |
| Manufacturing |
21,600 | 11,680 | - |
| March costs incurred: | |||
| Direct materials | - | 8,400 | 21,000 |
| Direct Labour | 4,000 | 5,800 | 10,300 |
| Manufacturing overhead | ? | ? | ? |
Manufacturing overhead is applied to jobs on the basis of direct labor cost. Balances in the inventory accounts at the end of February were as follows:
| Raw Materials | $ 40,000 |
| Work in Process | ? |
| Finished goods | 85,000 |
1.What is the February 28th work in process balance? Assume no over/under applied manufacturing overhead.
2.What is the predetermined overhead rate that CCI uses to apply manufacturing overhead? What manufacturing overhead was applied to the 3 jobs in March?
3.If CCI incurred actual manufacturing overhead of $4,000 in indirect materials, $8,200 in indirect labor, and $20,500 in other various
4.What is the Raw Materials ending inventory balance at the end of March assuming CCI did not make any raw material purchases during December?
5.Assume that, during March, CCI sold goods costing $45,000. What is the finished goods inventory balance at the end of March?
6.What is the Work-in-Process Inventory ending balance on March 31st? Assume over/underapplied inventory is closed out to the cost of goods sold.
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