Exercise 6-11 Journal Entries Sharma Company has three process departments: Mixing, Encapsulating, and Bottling. At the beginning of the year, there were no work-in-process or finished goods inventories. The following data are available for the month of July: lllll! EXCEL Manufacturing Ending Work in Department Costs Added* Process Mixing $86,400 $21,600 Encapsulating 79,200 18,000 Bottling 72,000 3,600 *Includes only the direct materials, direct labor, and the overhead used to process the partially finished goods received from the prior department. The transferred-in cost is not included. 302 Chapter 6 Process Costing Required: 1. Prepare journal entries that show the transfer of costs from one department to the next (including the entry to transfer the costs of the final department). 2. Prepare T-accounts for the entries made in Requirement 1. Use arrows to show the flow of costs.
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.
OBJECTIVE
1
2
Exercise 6-11
lllll!
EXCEL
Manufacturing Ending Work in Department
Costs Added*
Process Mixing
$86,400
$21,600 Encapsulating
79,200
18,000 Bottling
72,000
3,600 *Includes only the direct materials, direct labor, and the overhead used to process the partially finished goods received from the prior department. The transferred-in cost is not included.
302
Chapter 6
Required:
- 1. Prepare journal entries that show the transfer of costs from one department to the next
(including the entry to transfer the costs of the final department). 2. Prepare T-accounts for the entries made in Requirement 1. Use arrows to show the flow of costs.
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