Gilkison Corporation uses a job-order costing system to assign manufacturing costs to jobs. At the end of the month it closes out any overapplied or underapplied manufacturing overhead to Cost of Goods Sold. Its balance sheet on October 1 appears below: Gilkison Corporation Balance Sheet October 1 Assets: Cash $ 10,350 Raw materials $ 3,350 Work in process 15,350 Finished goods 19,350 38,050 Property, plant, and equipment (net) 229,350 Total assets $277,750 Liabilities and Stockholders’ Equity: Accounts payable $ 15,175 Retained earnings 262,575 Total liabilities and stockholders’ equity $277,750 Summaries of the transactions completed during October appear below: (1) Raw materials purchased on account $ 66,350 (2) Raw materials used in production (direct materials) $ 50,350 (3) Raw materials used in production (indirect materials) $ 7,175 (4) Direct labor paid in cash $ 95,350 (5) Indirect labor paid in cash $ 25,350 (6) Selling and administrative salaries paid in cash $ 30,350 (7) Factory utility costs (on account) $ 12,350 (8) Depreciation on PP&E—manufacturing equipment $ 10,350 (9) Depreciation on PP&E—selling and administration $ 2,175 (10) Advertising expenses paid in cash $ 15,350 (11) Manufacturing overhead applied to production $ 58,050 (12) Cost of goods manufactured $196,350 (13) Cash sales $276,000 (14) Cost of goods sold $205,350 (15) Cash payments to creditors $ 81,350 (16) Overapplied (underapplied) overhead ? Required: a. Complete the spreadsheet below. b. Prepare a Schedule of Cost of Goods Sold for the company for October. c. Prepare an Income Statement for the company for October.
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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Gilkison Corporation uses a
| Gilkison Corporation | ||
| Balance Sheet | ||
| October 1 | ||
| Assets: | ||
|---|---|---|
| Cash | $ 10,350 | |
| Raw materials | $ 3,350 | |
| Work in process | 15,350 | |
| Finished goods | 19,350 | 38,050 |
| Property, plant, and equipment (net) | 229,350 | |
| Total assets | $277,750 | |
| Liabilities and |
||
| Accounts payable | $ 15,175 | |
| 262,575 | ||
| Total liabilities and stockholders’ equity | $277,750 |
Summaries of the transactions completed during October appear below:
| (1) Raw materials purchased on account | $ 66,350 |
|---|---|
| (2) Raw materials used in production (direct materials) | $ 50,350 |
| (3) Raw materials used in production (indirect materials) | $ 7,175 |
| (4) Direct labor paid in cash | $ 95,350 |
| (5) Indirect labor paid in cash | $ 25,350 |
| (6) Selling and administrative salaries paid in cash | $ 30,350 |
| (7) |
$ 12,350 |
| (8) |
$ 10,350 |
| (9) Depreciation on PP&E—selling and administration | $ 2,175 |
| (10) Advertising expenses paid in cash | $ 15,350 |
| (11) Manufacturing overhead applied to production | $ 58,050 |
| (12) Cost of goods manufactured | $196,350 |
| (13) Cash sales | $276,000 |
| (14) Cost of goods sold | $205,350 |
| (15) Cash payments to creditors | $ 81,350 |
| (16) Overapplied (underapplied) overhead | ? |
Required:
a. Complete the spreadsheet below.
b. Prepare a Schedule of Cost of Goods Sold for the company for October.
c. Prepare an Income Statement for the company for October.
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