he following costs relate to one month's activity in Martin Company: Indirect materials $ 300 Rent on factory building $ 500 Maintenance of equipment $ 50 Direct material used $1,200 Utilities on factory $ 250 Direct labour $1,500 Selling expense $ 500 Administrative expense $ 300 Work-in-process inventory, beginning $ 600 Work-in-process inventory, ending $ 800 Finished goods inventory, beginning $ 500 Finished goods inventory, ending $ 250
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.
The following costs relate to one month's activity in Martin Company:
|
Indirect materials |
$ 300 |
|
Rent on factory building |
$ 500 |
|
Maintenance of equipment |
$ 50 |
|
Direct material used |
$1,200 |
|
Utilities on factory |
$ 250 |
|
Direct labour |
$1,500 |
|
Selling expense |
$ 500 |
|
Administrative expense |
$ 300 |
|
Work-in-process inventory, beginning |
$ 600 |
|
Work-in-process inventory, ending |
$ 800 |
|
Finished goods inventory, beginning |
$ 500 |
|
Finished goods inventory, ending |
$ 250 |
Required:
(a.) Prepare a schedule of cost of goods manufactured in good form.
(b.) Determine the cost of goods sold.
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