During the month of January, the following transactions were completed: a. Raw materials were purchased for $30,000. b. Raw materials were requisitioned for use in production in the amount of $35,000. Of this amount, $25,000 was related to manufacturing ($5,000 for Job A and $20,000 for Job B) and the rest were indirect materials. c. In January, $32,000 of direct labour ($7,000 for Job A and $25,000 for Job B). In addition, $2,000 of indirect labour costs were incurred. d. In January, the company incurred the following general factory costs: Utilities expense of $8,000, rent on factory equipment of $8,000, and insurance costs of $1,900. e. The company recognized $10,000 in depreciation on factory equipment. f. The company applied manufacturing overhead to Job A and Job B. A total of 350 direct labour-hours were spent completing Job A and 1,250 direct labour-hours were recorded for Job B. g. Administrative salaries of $30,000 were paid in January. h. Selling expenses totalled $6,000 in January. i. Job A was completed in January. The completed cost of Job A according to the job cost sheet was $34,500. Job B remains in process at the end of January. j. Sales of all 1,200 units in Job A were recorded on account in the amount of $48,300 in January.
During the month of January, the following transactions were completed: a. Raw materials were purchased for $30,000. b. Raw materials were requisitioned for use in production in the amount of $35,000. Of this amount, $25,000 was related to manufacturing ($5,000 for Job A and $20,000 for Job B) and the rest were indirect materials. c. In January, $32,000 of direct labour ($7,000 for Job A and $25,000 for Job B). In addition, $2,000 of indirect labour costs were incurred. d. In January, the company incurred the following general factory costs: Utilities expense of $8,000, rent on factory equipment of $8,000, and insurance costs of $1,900. e. The company recognized $10,000 in depreciation on factory equipment. f. The company applied manufacturing overhead to Job A and Job B. A total of 350 direct labour-hours were spent completing Job A and 1,250 direct labour-hours were recorded for Job B. g. Administrative salaries of $30,000 were paid in January. h. Selling expenses totalled $6,000 in January. i. Job A was completed in January. The completed cost of Job A according to the job cost sheet was $34,500. Job B remains in process at the end of January. j. Sales of all 1,200 units in Job A were recorded on account in the amount of $48,300 in January.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Question
Determine the adjusted Cost of Goods Sold by using the data provided in the attached images.
Transcribed Image Text:Mountain Manufacturing Company produces custom stamped metal parts for a variety of customers in Western Canada. During
January, the company had two jobs in process. Job A was an order for 1,200 stamped parts and was started in December. Job A
had $12,000 of manufacturing costs already accumulated on January 1. Job B was an order for 1,000 stamped parts and was
started in January.
The company used a job-order costing system. Total manufacturing overhead for the year was estimated to be $576,000.
Mountain Manufacturing uses direct labour-hours as the allocation base to establish its predetermined overhead rate. A total of
19,200 direct labour-hours are expected to be worked during the year. On January 1, the start of the company's fiscal year,
inventory account balances were as follows:
Raw Materials.
Work in Process
Finished Goods
$15,000
$12,000
$10,000
Transcribed Image Text:During the month of January, the following transactions were completed:
a. Raw materials were purchased for $30,000.
b. Raw materials were requisitioned for use in production in the amount of $35,000. Of this amount, $25,000 was related to
manufacturing ($5,000 for Job A and $20,000 for Job B) and the rest were indirect materials.
c. In January, $32,000 of direct labour ($7,000 for Job A and $25,000 for Job B). In addition, $2,000 of indirect labour costs were
incurred.
d. In January, the company incurred the following general factory costs: Utilities expense of $8,000, rent on factory equipment of
$8,000, and insurance costs of $1,900.
e. The company recognized $10,000 in depreciation on factory equipment.
f. The company applied manufacturing overhead to Job A and Job B. A total of 350 direct labour-hours were spent completing
Job A and 1,250 direct labour-hours were recorded for Job B.
g. Administrative salaries of $30,000 were paid in January.
h. Selling expenses totalled $6,000 in January.
i. Job A was completed in January. The completed cost of Job A according to the job cost sheet was $34,500. Job B remains in
process at the end of January.
j. Sales of all 1,200 units in Job A were recorded on account in the amount of $48,300 in January.
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