Finn Manufacturing Company uses a job order cost system and keeps perpetual inventory records. Prepare journal entries to record the following transactions during the month of June. Your entries should look like this: Debit Account X Credit Account Y June 1 8 15 25 25 25 28 30 Purchased raw materials for $20,000 on account. Raw materials requisitioned by production: Direct materials Indirect materials $8,000 1,000 Paid factory utilities, $2,100 and repairs for factory equipment, $8,000. Incurred $108,000 of factory labor. Time tickets indicated the following: Direct labor Indirect labor (7,000 hrs. x $12 per hr.) (3,000 hrs. x $8 per hr.) = = $ 84,000 24,000 $108,000 Applied manufacturing overhead to production based on a predetermined overhead rate of $7 per direct labor hour worked. Goods costing $18,000 were completed in the factory and were transferred to finished goods inventory. Goods costing $15,000 were sold for $20,000 on account.
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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