Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred: Materials were purchased on account for $45,670. Materials totaling $40,990 were requisitioned for use in producing various jobs. Direct labor payroll for the month was $22,400 with an average wage of $14 per hour. Actual overhead of $9,020 was incurred and paid in cash. Manufacturing overhead is charged to production at the rate of $5.50 per direct labor hour. Completed jobs costing $58,000 were transferred to Finished Goods. Jobs costing $59,000 were sold on account for $73,750. Beginning balances as of July 1 were: Materials Inventory $1,200 Work-in-Process Inventory 3,400 Finished Goods Inventory 2,630 Instructions: 1) Prepare the journal entries for the preceding events 2) Calculate the ending balances of: a) Materials Inventory - B) Work-in-Process Inventory - C) Overhead Control - D) Finished Goods Inventory
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.
Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred:
-
Materials were purchased on account for $45,670.
-
Materials totaling $40,990 were requisitioned for use in producing various jobs.
-
Direct labor payroll for the month was $22,400 with an average wage of $14 per hour.
-
Actual
overhead of $9,020 was incurred and paid in cash. -
Manufacturing overhead is charged to production at the rate of $5.50 per direct labor hour.
-
Completed
jobs costing $58,000 were transferred to Finished Goods. -
Jobs costing $59,000 were sold on account for $73,750.
Beginning balances as of July 1 were:
| Materials Inventory | $1,200 |
| Work-in-Process Inventory | 3,400 |
| Finished Goods Inventory | 2,630 |
Instructions:
1) Prepare the
2) Calculate the ending balances of: a) Materials Inventory - B) Work-in-Process Inventory - C) Overhead Control - D) Finished Goods Inventory
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