Ialani Corp. uses a job order costing system for the yachts it constructs. On September 1, the company had the following account balances: Raw Material Inventory $465,360 Work in Process Inventory $2,117,640 Cost of Goods Sold $6,809,600 On September 1, the three jobs in Work in Process Inventory had the following balances: Job #75 $820,960 Job #78 $373,240 Job #82 $923,440 The following transactions occurred during September: 09-01 Purchased $2,716,000 of raw material on account. 09-04 Issued $2,660,000 of raw material as follows: Job #75, $405,440; Job #78 $353,640 ; Job #82, $1,389,080 ; Job #86, $437,360 ; and indirect material, $74,480. 09-15 Prepared and paid the $1,059,800 factory payroll for September 1–15. Analysis of this payroll showed the following information: Hours Dollars Job #75 13,524 $118,440 Job #78 36,848 $374,080 Job #82 28,420 $284,200 Job #86 14,392 $155,120 Indirect Labor Wages $127,960 09-15 On each payroll date, Ialani Corp. applies manufacturing overhead to jobs at a rate of $12.50 per direct labor hour. 09-15 Job #75 was completed, accepted by the customer, and billed at a selling price of cost plus 30 percent. Selling prices are rounded to the nearest whole dollar. 09-20 Paid the following monthly factory bills: utilities, $55,440 ; rent, $98,840 ; and accounts payable (accrued in August), $275,520. 09-24 Purchased raw material on account, $873,600. 09-25 Issued $1,002,960 of direct material as follows: Job #78, $216,720 ; Job #82, $297,640; Job #86, $488,600 ; indirect material issued was $78,120. 09-30 Recorded additional factory overhead costs as follows: depreciation, $1,132,600; expired prepaid insurance, $231,560 ; and accrued taxes and licenses, $325,360. 09-30 Recorded and paid the factory payroll for September 16–30 of $1,000,160. Analysis of the payroll follows: Hours Dollars Job #78 12,516 $248,360 Job #82 19,110 $319,760 Job #86 13,972 $341,040 Indirect Labor Wages $91,000 09-30 Applied overhead for the second half of the month to jobs. a. Journalize the September transactions.
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.
Ialani Corp. uses a
| Raw Material Inventory | $465,360 |
| Work in Process Inventory | $2,117,640 |
| Cost of Goods Sold | $6,809,600 |
On September 1, the three jobs in Work in Process Inventory had the following balances:
| Job #75 | $820,960 |
| Job #78 | $373,240 |
| Job #82 | $923,440 |
The following transactions occurred during September:
09-01 Purchased $2,716,000 of raw material on account.
09-04 Issued $2,660,000 of raw material as follows: Job #75, $405,440; Job #78 $353,640 ; Job #82, $1,389,080 ; Job #86, $437,360 ; and indirect material, $74,480.
09-15 Prepared and paid the $1,059,800 factory payroll for September 1–15. Analysis of this payroll showed the following information:
| Hours | Dollars | |
| Job #75 | 13,524 | $118,440 |
| Job #78 | 36,848 | $374,080 |
| Job #82 | 28,420 | $284,200 |
| Job #86 | 14,392 | $155,120 |
| Indirect Labor Wages | $127,960 |
09-15 On each payroll date, Ialani Corp. applies manufacturing
09-15 Job #75 was completed, accepted by the customer, and billed at a selling price of cost plus 30 percent. Selling prices are rounded to the nearest whole dollar.
09-20 Paid the following monthly factory bills: utilities, $55,440 ; rent, $98,840 ; and accounts payable (accrued in August), $275,520.
09-24 Purchased raw material on account, $873,600.
09-25 Issued $1,002,960 of direct material as follows: Job #78, $216,720 ; Job #82, $297,640; Job #86, $488,600 ; indirect material issued was $78,120.
09-30 Recorded additional
09-30 Recorded and paid the factory payroll for September 16–30 of $1,000,160. Analysis of the payroll follows:
| Hours | Dollars | |
| Job #78 | 12,516 | $248,360 |
| Job #82 | 19,110 | $319,760 |
| Job #86 | 13,972 | $341,040 |
| Indirect Labor Wages | $91,000 |
09-30 Applied overhead for the second half of the month to jobs.
a. Journalize the September transactions.
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