Kaitlyn, Inc. is a manufacturer who uses a job order costing system. The data below summarizes the operations related to production and sales for January, the first month of operations. Kaitlyn, Inc. allocates factory overhead on a monthly basis based upon total monthly factory overhead costs and direct labor hours. Total direct labor hours for January are 75,000 hours. Purchased the following raw materials: • 6,000 units for Job 1 @ $10/unit • 5,500 units for Job 2 @ $15/unit • 12,300 units for Job 3 @ $5/unit Requisitioned materials for production: • 5,000 units for Job 1 @ $10/unit • 4,000 units for Job 2 @ $15/unit • 10,000 unit for Job 3 @ $5/unit • Direct labor costs: • 2,000 hours of direct labor on Job 1 at $15 per hour • 10,000 hours of direct labor on Job 2 at $14 per hour • 8,000 hours of direct labor on Job 3 at $20 per hour • Total factory overhead costs for the month: • $70,000 of indirect materials • $115,000 of indirect labor • $97,000 of utilities costs • $18,000 of factory depreciation Production data: • Job 1 produced 5,000 units out of an estimated possible 8,000 units, • Job 2 produced 20,000 units out of an estimated possible 24,000 units • Job 3 produced 11,000 units out of an estimated possible 12,100 units, Sales data: • Job 1 → 4,000 units sold on credit for $25 per unit • Job 2 → 18,000 units sold on credit for $30 per unit • Job 3 → 10,000 units sold on credit for $50 per unit To Do: Complete the T-Accounts on the following page, as well as the Cost Flow Worksheets. Helpful Hint: While not required for this assignment, it might be helpful to create the related journal entries.
Kaitlyn, Inc. is a manufacturer who uses a job order costing system. The data below summarizes the operations related to production and sales for January, the first month of operations. Kaitlyn, Inc. allocates factory overhead on a monthly basis based upon total monthly factory overhead costs and direct labor hours. Total direct labor hours for January are 75,000 hours. Purchased the following raw materials: • 6,000 units for Job 1 @ $10/unit • 5,500 units for Job 2 @ $15/unit • 12,300 units for Job 3 @ $5/unit Requisitioned materials for production: • 5,000 units for Job 1 @ $10/unit • 4,000 units for Job 2 @ $15/unit • 10,000 unit for Job 3 @ $5/unit • Direct labor costs: • 2,000 hours of direct labor on Job 1 at $15 per hour • 10,000 hours of direct labor on Job 2 at $14 per hour • 8,000 hours of direct labor on Job 3 at $20 per hour • Total factory overhead costs for the month: • $70,000 of indirect materials • $115,000 of indirect labor • $97,000 of utilities costs • $18,000 of factory depreciation Production data: • Job 1 produced 5,000 units out of an estimated possible 8,000 units, • Job 2 produced 20,000 units out of an estimated possible 24,000 units • Job 3 produced 11,000 units out of an estimated possible 12,100 units, Sales data: • Job 1 → 4,000 units sold on credit for $25 per unit • Job 2 → 18,000 units sold on credit for $30 per unit • Job 3 → 10,000 units sold on credit for $50 per unit To Do: Complete the T-Accounts on the following page, as well as the Cost Flow Worksheets. Helpful Hint: While not required for this assignment, it might be helpful to create the related journal entries.
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:Inventory and Overhead T-Accounts: Job 1 and Job 2 and Job 3
Raw Materials
WIP
Finished Goods
Overhead
Transcribed Image Text:Kaitlyn, Inc. is a manufacturer who uses a job order costing system. The data below summarizes
the operations related to production and sales for January, the first month of operations. Kaitlyn,
Inc. allocates factory overhead on a monthly basis based upon total monthly factory overhead
costs and direct labor hours. Total direct labor hours for January are 75,000 hours.
Purchased the following raw materials:
• 6,000 units for Job 1 @ $10/unit
• 5,500 units for Job 2 @ $15/unit
• 12,300 units for Job 3 @ $5/unit
Requisitioned materials for production:
• 5,000 units for Job 1 @ $10/unit
• 4,000 units for Job 2 @ $15/unit
• 10,000 unit for Job 3 @ $5/unit
• Direct labor costs:
• 2,000 hours of direct labor on Job 1 at $15 per hour
• 10,000 hours of direct labor on Job 2 at $14 per hour
• 8,000 hours of direct labor on Job 3 at $20 per hour
• Total factory overhead costs for the month:
• $70,000 of indirect materials
• $115,000 of indirect labor
• $97,000 of utilities costs
• $18,000 of factory depreciation
• Production data:
• Job 1 produced 5,000 units out of an estimated possible 8,000 units,
• Job 2 produced 20,000 units out of an estimated possible 24,000 units
• Job 3 produced 11,000 units out of an estimated possible 12,100 units,
Sales data:
• Job 1→ 4,000 units sold on credit for $25 per unit
• Job 2 → 18,000 units sold on credit for $30 per unit
• Job 3 → 10,000 units sold on credit for $50 per unit
To Do: Complete the T-Accounts on the following page, as well as the Cost Flow Worksheets.
Helpful Hint: While not required for this assignment, it might be helpful to create the related
journal entries.
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