Kenworth Company uses a job-order costing system. Only three jobs—Job 105, Job 106, and Job 107—were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company’s operating year. Data from the job cost sheets of the three jobs follow: Job Cost Sheet Job 105 Job 106 Job 107 November costs incurred: Direct materials $ 17,900 $ 10,700 $ 0 Direct labour $ 14,400 $ 8,400 $ 0 Manufacturing overhead $ 23,040 $ 13,440 $ 0 December costs incurred: Direct materials $ 0 $ 8,900 $ 24,100 Direct labour $ 5,050 $ 6,700 $ 11,400 Manufacturing overhead ? ? ? The following additional information is available: Manufacturing overhead is applied to jobs on the basis of direct labour cost. Balances in the inventory accounts at November 30 were as follows: Raw Materials $ 44,200 Work in Process ? Finished Goods $ 92,000 Required: 1. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing Overhead. Enter the November 30 inventory balances given above; in the case of Work in Process, compute the November 30 balance and enter it into the Work in Process T-account. 2. Prepare journal entries for December as follows: a. Prepare an entry to record the issue of materials into production and post the entry to appropriate T-accounts. (In the case of direct materials, it is not necessary to make a separate entry for each job.) Indirect materials used during December totalled $5,050. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) b. Prepare an entry to record the incurrence of labour cost, and post the entry to appropriate T-accounts. (In the case of direct labour cost, it is not necessary to make a separate entry for each job.) Indirect labour cost totalled $9,400 for December. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) c. Prepare an entry to record the incurrence of $20,890 in various actual manufacturing overhead costs for December (credit Accounts Payable). Post this entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 3-a. What apparent predetermined overhead rate does the company use to assign overhead cost to jobs? 3-b. Prepare a journal entry to record the application of overhead cost to jobs for December (it is not necessary to make a separate entry for each job). Post this entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 4. As stated earlier, Job 105 was completed during December. Prepare a journal entry to show the transfer of this job off the production line and into the finished goods warehouse. Post the entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 5. Determine the balance at December 31 in the Work in Process inventory account. How much of this balance consists of costs charged to Job 106? Job 107?
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.
Kenworth Company uses a job-order costing system. Only three jobs—Job 105, Job 106, and Job 107—were worked on during November and December. Job 105 was completed on December 10; the other two jobs were still in production on December 31, the end of the company’s operating year. Data from the
| Job Cost Sheet | |||||||||
| Job 105 | Job 106 | Job 107 | |||||||
| November costs incurred: | |||||||||
| Direct materials | $ | 17,900 | $ | 10,700 | $ | 0 | |||
| Direct labour | $ | 14,400 | $ | 8,400 | $ | 0 | |||
| Manufacturing |
$ | 23,040 | $ | 13,440 | $ | 0 | |||
| December costs incurred: | |||||||||
| Direct materials | $ | 0 | $ | 8,900 | $ | 24,100 | |||
| Direct labour | $ | 5,050 | $ | 6,700 | $ | 11,400 | |||
| Manufacturing overhead | ? | ? | ? | ||||||
The following additional information is available:
- Manufacturing overhead is applied to jobs on the basis of direct labour cost.
- Balances in the inventory accounts at November 30 were as follows:
| Raw Materials | $ | 44,200 | |
| Work in Process | ? | ||
| Finished Goods | $ | 92,000 | |
Required:
1. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, and Manufacturing Overhead. Enter the November 30 inventory balances given above; in the case of Work in Process, compute the November 30 balance and enter it into the Work in Process T-account.
2. Prepare journal entries for December as follows:
a. Prepare an entry to record the issue of materials into production and
b. Prepare an entry to record the incurrence of labour cost, and post the entry to appropriate T-accounts. (In the case of direct labour cost, it is not necessary to make a separate entry for each job.) Indirect labour cost totalled $9,400 for December. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
c. Prepare an entry to record the incurrence of $20,890 in various actual
3-a. What apparent predetermined overhead rate does the company use to assign overhead cost to jobs?
3-b. Prepare a journal entry to record the application of overhead cost to jobs for December (it is not necessary to make a separate entry for each job). Post this entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
4. As stated earlier, Job 105 was completed during December. Prepare a journal entry to show the transfer of this job off the production line and into the finished goods warehouse. Post the entry to the appropriate T-accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
5. Determine the balance at December 31 in the Work in Process inventory account. How much of this balance consists of costs charged to Job 106? Job 107?
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Everything above is done correctly except for #1, I'm not sure why it says it is still incomplete
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