Job Order Costing: T Account Analysis P2. Eagle Carts, Inc., produces special-order golf carts, so Eagle Carts uses a job order costing system. Overhead is applied at the rate of 90 percent of direct labor cost. A list of transactions for January follows. Jan. 1 Purchased direct materials on account, $215,400. 2 Purchased indirect materials on account, $49,500. 4 Requested direct materials costing $193,200 (all used on Job X) and indirect materials costing $38,100 for production. 10 Paid the following overhead costs: utilities, $4,400; manufacturing rent, $3,800; and maintenance charges, $3,900. Jan. 15 Recorded the following gross wages and salaries for employees: direct labor, $120,000 (all for Job X); indirect labor, $60,620. 15 Applied overhead to production. 19 Purchased indirect materials costing $27,550 and direct materials costing $190,450 on account. 21 Requested direct materials costing $214,750 (Job X, $178,170; Job Y, $18,170; and Job Z, $18,410) and indirect materials costing $31,400 for production. 31 Recorded the following gross wages and salaries for employees: direct labor, $132,000 (Job X, $118,500; Job Y, $7,000; Job Z, $6,500); indirect labor, $62,240. 31 Applied overhead to production. 31 Completed and transferred Job X (375 carts) and Job Y (10 carts) to finished goods inventory; total cost was $855,990. 31 Shipped Job X to the customer; total production cost was $824,520 and sales price was $996,800. 31 Recorded these overhead costs (adjusting entries): prepaid insurance expired, $3,700; property taxes (payable at year end), $3,400; and depreciation— machinery, $15,500. Required 1. Record the entries for all transactions in January using T accounts for the following: Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Overhead, Cash, Accounts Receivable, Prepaid Insurance, Accumulated Depreciation— Machinery, Accounts Payable, Payroll Payable, Property Taxes Payable, Sales, and Cost of Goods Sold. Prepare job order cost cards for Job X, Job Y, and Job Z. (Round product unit cost to two decimal places.) Determine the partial account balances. Assume no beginning inventory balances. Also assume that when the payroll was recorded, entries were made to the Payroll Payable account. 2. Compute the amount of underapplied or overapplied overhead as of January 31 and transfer it to the Cost of Goods Sold account.
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.
Job Order Costing: T Account Analysis
P2. Eagle Carts, Inc., produces special-order golf carts, so Eagle Carts uses a job order
costing system.
of transactions for January follows.
Jan. 1 Purchased direct materials on account, $215,400.
2 Purchased indirect materials on account, $49,500.
4 Requested direct materials costing $193,200 (all used on Job X) and indirect
materials costing $38,100 for production.
10 Paid the following overhead costs: utilities, $4,400; manufacturing rent,
$3,800; and maintenance charges, $3,900.
Jan. 15 Recorded the following gross wages and salaries for employees: direct labor,
$120,000 (all for Job X); indirect labor, $60,620.
15 Applied overhead to production.
19 Purchased indirect materials costing $27,550 and direct materials costing
$190,450 on account.
21 Requested direct materials costing $214,750 (Job X, $178,170; Job Y,
$18,170; and Job Z, $18,410) and indirect materials costing $31,400 for
production.
31 Recorded the following gross wages and salaries for employees: direct labor,
$132,000 (Job X, $118,500; Job Y, $7,000; Job Z, $6,500); indirect labor,
$62,240.
31 Applied overhead to production.
31 Completed and transferred Job X (375 carts) and Job Y (10 carts) to finished
goods inventory; total cost was $855,990.
31 Shipped Job X to the customer; total production cost was $824,520 and
sales price was $996,800.
31 Recorded these overhead costs (
$3,700; property taxes (payable at year end), $3,400; and
machinery, $15,500.
Required
1. Record the entries for all transactions in January using T accounts for the following:
Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Overhead,
Cash,
Machinery, Accounts Payable, Payroll Payable, Property Taxes Payable, Sales, and
Cost of Goods Sold. Prepare
(Round product unit cost to two decimal places.) Determine the partial account
balances. Assume no beginning inventory balances. Also assume that when the payroll
was recorded, entries were made to the Payroll Payable account.
2. Compute the amount of underapplied or overapplied overhead as of January 31 and
transfer it to the Cost of Goods Sold account.
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