Kapoor Company uses job-order costing. During January, the following data were reported: a. Materials purchased on account: direct materials, $98,500; indirect materials, S14,800. b. Materials issued: direct materials, S82,500; indirect materials, S8,800. c. Labor cost incurred: direct labor, $67,000; indirect labor, $18,750. d. Other manufacturing costs incurred ( all payables), S46,200. e, Overhead is applied on the basis of 110 percent of direct labor cost. f. Wark finished and transferred to Finished Goods Inventory cost $230,000. g. Finished goods costing S215,000 were sold on account for 140 percent of cost. h. Any over- or underapplied overhead is closed to Cost of Goods Sold. Required: 1, Prepare journal entries to record these transactions. 2. Prepare a T-account for Overhead Control. Post all relevant information to this account. What is the ending balance in this account? 3. Prepare a T-account for Wark-in- Process Inventory. Assume a beginning balance of S10,000, and post all relevant Information to this account. Did you assign any actual overhead costs to Work-in-Process Inventory? Why or why
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.
Exercise 5.19
Objective 4 - Describe the cost flows associated with
prepare the joumal entries.
Kapoor Company uses job-order costing. During January, the following data
were reported:
a. Materials purchased on account: direct materials, $98,500; indirect
materials, S14,800.
b. Materials issued: direct materials, S82,500; indirect materials, S8,800.
c. Labor cost incurred: direct labor, $67,000; indirect labor, $18,750.
d. Other
e,
f. Wark finished and transferred to Finished Goods Inventory cost
$230,000.
g. Finished goods costing S215,000 were sold on account for 140 percent
of cost.
h. Any over- or underapplied overhead is closed to Cost of Goods Sold.
Required:
1, Prepare journal entries to record these transactions.
2. Prepare a T-account for Overhead Control. Post all relevant information to this
account. What is the ending balance in this account?
3. Prepare a T-account for Wark-in- Process Inventory. Assume a beginning
balance of S10,000, and post all relevant Information to this account. Did you
assign any actual overhead costs to Work-in-Process Inventory? Why or why
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