Green Scenery Company provides landscape services and operated based on customer order. The company uses normal costing, and the overhead allocation base is direct labour costs. On 1st May, the balance of raw material inventory was RM24,000. There were two incomplete jobs as of 1st May, with the following costs: Direct materials Direct labour Applied overhead Total costs Direct materials Direct labour Job 47 Zee Enterprise RM10,250 In May, Green Scenery also started production of two news jobs. Job 47 and Job 33 were continued of which Job 33 completed and billed to Bell Company. Details of the costs incurred during May by each job is as follows: Property taxes Material storage rental Inspection costs Job 47 RM2,000 3,000 9,000 2,700 RM21,950 Transportation costs Telephone and other miscellaneous Machine depreciation Advertising costs Job 33 RM3,200 4,500 Other transactions in May: 1. Received payment of RM12,500 for Job 34 that was delivered to the customer in April. 2. Purchased raw materials for RM9,400. Job 33 Bell Company 3. Sent a bill of RM87,500 to Bell Company and received RM50,000 payment from the amount. 4. Incurred indirect labour salary costs RM650. 5. Material supplies used for current jobs costs RM155. 6. Recorded the following overhead costs and advertising costs (all costs are cash except machine depreciation): RM550 675 200 320 325 Job 51 RM4,600 5,900 450 600 RM35,000 17,500 5,250 RM57,750 Job 52 RM2,000 1,600 Required: a) Prepare the journal entries to record all transactions occurred in May. b) Prepare the adjusting entry for over applied or under applied overhead in May. Charge the overhead variance to the cost of goods sold account. c) Determine the ending balance of work in process account in May.
Green Scenery Company provides landscape services and operated based on customer order. The company uses normal costing, and the overhead allocation base is direct labour costs. On 1st May, the balance of raw material inventory was RM24,000. There were two incomplete jobs as of 1st May, with the following costs: Direct materials Direct labour Applied overhead Total costs Direct materials Direct labour Job 47 Zee Enterprise RM10,250 In May, Green Scenery also started production of two news jobs. Job 47 and Job 33 were continued of which Job 33 completed and billed to Bell Company. Details of the costs incurred during May by each job is as follows: Property taxes Material storage rental Inspection costs Job 47 RM2,000 3,000 9,000 2,700 RM21,950 Transportation costs Telephone and other miscellaneous Machine depreciation Advertising costs Job 33 RM3,200 4,500 Other transactions in May: 1. Received payment of RM12,500 for Job 34 that was delivered to the customer in April. 2. Purchased raw materials for RM9,400. Job 33 Bell Company 3. Sent a bill of RM87,500 to Bell Company and received RM50,000 payment from the amount. 4. Incurred indirect labour salary costs RM650. 5. Material supplies used for current jobs costs RM155. 6. Recorded the following overhead costs and advertising costs (all costs are cash except machine depreciation): RM550 675 200 320 325 Job 51 RM4,600 5,900 450 600 RM35,000 17,500 5,250 RM57,750 Job 52 RM2,000 1,600 Required: a) Prepare the journal entries to record all transactions occurred in May. b) Prepare the adjusting entry for over applied or under applied overhead in May. Charge the overhead variance to the cost of goods sold account. c) Determine the ending balance of work in process account in May.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Transcribed Image Text:Green Scenery Company provides landscape services and operated based on customer order. The
company uses normal costing, and the overhead allocation base is direct labour costs. On 1st May, the
balance of raw material inventory was RM24,000. There were two incomplete jobs as of 1st May, with
the following costs:
Direct materials
Direct labour
Applied overhead
Total costs
Direct materials
Direct labour
In May, Green Scenery also started production of two news jobs. Job 47 and Job 33 were continued of
which Job 33 completed and billed to Bell Company. Details of the costs incurred during May by each
job is as follows:
Job 47
Zee Enterprise
RM10,250
9,000
2,700
RM21,950
Property taxes
Material storage rental
Inspection costs
Job 47
RM2,000
3,000
Transportation costs
Telephone and other miscellaneous
Machine depreciation
Advertising costs
Job 33
RM3,200
4,500
Job 33
Bell Company
Other transactions in May:
1. Received payment of RM12,500 for Job 34 that was delivered to the customer in April.
2. Purchased raw materials for RM9,400.
3. Sent a bill of RM87,500 to Bell Company and received RM50,000 payment from the amount.
4. Incurred indirect labour salary costs RM650.
Job 51
RM4,600
5,900
5. Material supplies used for current jobs costs RM155.
6. Recorded the following overhead costs and advertising costs (all costs are cash except machine
depreciation):
RM550
675
200
320
325
450
600
RM35,000
17,500
5,250
RM57,750
Job 52
RM2,000
1,600
Required:
a) Prepare the journal entries to record all transactions occurred in May.
b) Prepare the adjusting entry for over applied or under applied overhead in May. Charge the overhead
variance to the cost of goods sold account.
c) Determine the ending balance of work in process account in May.
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