Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs based on machine-hours. At the beginning of the year, the company used a cost formula to estimate $4,222,500 in manufacturing overhead cost at an activity level of 563,000 machine-hours. The company spent the month of January working on a large order for 12,100 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials purchased on account, $313,000. b. Raw materials used in production, $255,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $153,000 (one-third direct labor and two-thirds indirect labor). d. Depreciation recorded on factory equipment, $63,200. e. Other manufacturing overhead costs incurred on account, $84,600. f. Manufacturing overhead cost was applied to production on the basis of 40,880 machine-hours actually worked. g. The completed job for 12,100 custom-made machined parts was moved into the finished goods warehouse on January 31 to await delivery to the customer. (in computing the dollar amount for this entry, remember the cost of a completed job consists of direct materials, direct labor, and applied overhead.) Required: 1. Prepare journal entries to record items (a) through (f) above lignore item (a) for the momentl
Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and applies overhead cost to jobs based on machine-hours. At the beginning of the year, the company used a cost formula to estimate $4,222,500 in manufacturing overhead cost at an activity level of 563,000 machine-hours. The company spent the month of January working on a large order for 12,100 custom-made machined parts. The company had no work in process at the beginning of January. Cost data relating to January follow: a. Raw materials purchased on account, $313,000. b. Raw materials used in production, $255,000 (80% direct materials and 20% indirect materials). c. Labor cost accrued in the factory, $153,000 (one-third direct labor and two-thirds indirect labor). d. Depreciation recorded on factory equipment, $63,200. e. Other manufacturing overhead costs incurred on account, $84,600. f. Manufacturing overhead cost was applied to production on the basis of 40,880 machine-hours actually worked. g. The completed job for 12,100 custom-made machined parts was moved into the finished goods warehouse on January 31 to await delivery to the customer. (in computing the dollar amount for this entry, remember the cost of a completed job consists of direct materials, direct labor, and applied overhead.) Required: 1. Prepare journal entries to record items (a) through (f) above lignore item (a) for the momentl
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
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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Transcribed Image Text:Dillon Products manufactures various machined parts to customer specifications. The company uses a job-order costing system and
applies overhead cost to jobs based on machine-hours. At the beginning of the year, the company used a cost formula to estimate
$4,222,500 in manufacturing overhead cost at an activity level of 563,000 machine-hours.
The company spent the month of January working on a large order for 12,100 custom-made machined parts. The company had no
work in process at the beginning of January. Cost data relating to January follow:
a. Raw materials purchased on account, $313,000.
b. Raw materials used in production, $255,000 (80% direct materials and 20% indirect materials).
c. Labor cost accrued in the factory, $153,000 (one-third direct labor and two-thirds indirect labor).
d. Depreciation recorded on factory equipment, $63,200.
e. Other manufacturing overhead costs incurred on account, $84,600.
f. Manufacturing overhead cost was applied to production on the basis of 40,880 machine-hours actually worked.
g. The completed job for 12,100 custom-made machined parts was moved into the finished goods warehouse on January 31 to await
delivery to the customer. (In computing the dollar amount for this entry, remember the cost of a completed job consists of direct
materials, direct labor, and applied overhead.)
Required:
1. Prepare journal entries to record items (a) through (f) above [ignore item (g) for the moment).
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