Gold Nest Company uses joborder costing system in which overhead is applied to jobs on the basis of direct labor cost. Estimated total direct labor cost for the year would be $200,000 and total manufacturing overhead cost would be $330,000. Inventory balance at the beginningof the year were Raw materials at $25,000, work in process at $10,000 and finished goods at $40,000.During theyear, the following transactions were completed:a.Raw materials purchased for cash, $275,000b.Raw materials requisitioned for use in production, $280,000. Materials charged directly to jobs, $220,000, the remaining materials were indirect.c.Cost of employee services were direct labor, $180,000; indirect labor, $72,000; sales commissions, $63,000, and administrative salaries, $90,000.d.Rent for the year was $18,000 of which $13,000 is related to factory operations and the rest to selling and administrative activities.e.Factory utility costs incurred, $57,000. Advertising costs, $140,000.f.Depreciation recorded on equipment, $100,000, out of which $88,000 was for factory equipment and the remaining was on equipment used in selling and administrative activities.g.Based on the job order cost sheets, goods manufactured and completed duringthe year cost $675,000 h.Sales for the year, $1,250,000. Cost to manufacture these goods according to their job cost sheets was $700,000.Required:1. Compute the total manufacturing overhead (MOH) applied to jobs for the year. Is the MOH under-applied or over-applied? Close the balance to cost of goods sold andprepare statement of cost of goods manufactured and income statement for the year.
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.
Gold Nest Company uses joborder costing system in which
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