E-3 Spoilage Valencia Plastics Company uses job order costs system to account for its production costs. During the current period, 1,000 chairs were molded and assembled on job order number 304. The total cost incurred on the job is: Materials Labor (2,500 hours x P20/hr.) Factory Overhead 200% of direct labor cost Total cost of Job No. 304 P120,000 50,000 100.000 P270.000 $270/ chalo Inspection was made at the end of the process and 100 chairs were found to be defective beyond repair, due to excusable negligence on the part of certain workers. The spoiled chairs can be sold at a salvage value of. P100 each. The company maintains a separate Spoiled Goods Inventory for defective product charges the unrecoverable cost of spoilage to Factory Overhead Control.
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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