Elegance Interior Design Ltd uses a job order cost accounting system and applies the overhead on the basis of direct labour cost. At the beginning of the year, Elegance Interior Design Ltd estimated the following: Overhead $108,000 Direct labour cost $270,000 Direct labour hours 21,600 hours Three jobs were worked on during the current period. Table A shows the cost information of the jobs. Table A Job Material Requisitions Time Ticket 223 $27,200 $65,000 224 $25,200 $67,500 225 $18,700 $28,375 At the end of the period, Job 224 and Job 225 have been completed, out of which Job 224 was sold. Due to the last-minute change in customer's specification, Job 223 was still in process. Overhead incurred for the
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.
Elegance Interior Design Ltd uses a job order cost accounting system and applies the
At the beginning of the year, Elegance Interior Design Ltd estimated the following:
Overhead $108,000
Direct labour cost $270,000
Direct labour hours 21,600 hours
Three jobs were worked on during the current period.
Table A shows the cost information of the jobs.
Table A
Job Material Requisitions Time Ticket
223 $27,200 $65,000
224 $25,200 $67,500
225 $18,700 $28,375
At the end of the period, Job 224 and Job 225 have been completed, out of which Job 224 was sold. Due to the last-minute change in customer's specification, Job 223 was still in process. Overhead incurred for the period was $65,020.
Question:
1)Complete the
| Job Number | ||
| Material | ||
| Overhead | ||
| Total Cost | ||
| Status |
2) Identify the amounts of each of the following accounts at the end of the period.
i. Work in Process
ii. Finished Goods
iii. Cost of Goods Sold
3) Compute the overhead variance and explain how this variance will be treated in the accounts. No
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