Deluxe Design Company makes custom furniture. On December 1, there were two jobs in process: Job 683 with a cost of $14,200 and Job 684 with a cost of $23,500. Jobs 685, 686, and 687 were started during the month of December. Data on costs added during the month are as follows: Job 685 Job 686 Job 687 Job 683 $11,000 Job 684 $8,000 $31,400 $16,700 $6,000 21,000 6,000 12,300 8,450 2,500 Overhead is applied to production at the rate of 80% of direct labor cost. Job 685 was completed on December 17. Job 684 was completed on December 21 and the client was billed at cost plus 45%. All other jobs remained in process. Direct materials Direct labor Required: A. The actual overhead for December was $41,100. Calculate the variance. $ B. Calculate the sales price for Job 684. C. Calculate the adjusted cost of goods sold for the month of December. D. If selling and administrative expenses for the month totaled $5,600, what is the company's operating income for December?
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.
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