Flightless Ltd adopts a job costing system. The following information is available for June: • Two jobs are work in process at the start of the month: Job number 9 ($93,000) and job number 10 (60,500). • Manufacturing overhead incurred in June includes: indirect labour ($20,000), indirect material ($37,000), depreciation ($19,000) and other factory costs ($75,000). • Flightless Ltd uses machine hours to apply manufacturing overhead. Budgeted overhead and machine activity for the month were estimated to be $1,890,000 and 54,000 hours, respectively. • The company worked on four jobs during June. The cost of direct material used and direct labour incurred, and number of machine hours consumed are as follows: Job number Direct material Direct labour Machine hours 9 25,000 37,000 1,150 10 18,000 500 11 39,000 45,000 1,700 12 47,000 52,000 1,200 • Jobs 9 and 10 are completed during June. Job 10 was sold on credit at a profit of $66,000. Required: (a) Prepare all relevant journal entries using the information available. Include a brief description of each entry. (b) Determine the cost of the jobs still in production as at 30 June.
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.
Flightless Ltd adopts a
|
Job number |
Direct material |
Direct labour |
Machine hours |
|
9 |
25,000 |
37,000 |
1,150 |
|
10 |
|
18,000 |
500 |
|
11 |
39,000 |
45,000 |
1,700 |
|
12 |
47,000 |
52,000 |
1,200 |
Required:
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