Direct Materials Direct Labor House 402 $ 52,000 $ 47,000 House 403 67,000 36,000 House 404 63,000 54,000 House 405 88,000 52,000
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.
Accounting for transactions, construction company
Meadow Construction, Inc. is a home builder in Arizona. Meadow uses a
a. Purchased materials on account, $450,000.
b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned.
c. The company incurred total wages of $240,000. Use the data from Item b to assign the wages. Wages are not yet paid.
d.
e. Other overhead costs incurred: Equipment rentals paid in cash, $40,000; Worker-liability insurance expired, $5,000.
f. Allocated overhead to jobs.
g. Houses completed: 402,404.
h. House sold on account: 404 for $250,000.
Requirements
- Calculate Meadow’s predetermined overhead allocation rate for the year.
- Prepare
journal entries to record the events in the general journal. - Open T-accounts for Work-in-Process Inventory and Finished Goods Inventory.
Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. - Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account.
- Add the cost of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory.
- Compute gross profit on the house that was sold. What costs must gross profit cover for Meadow Construction?
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