Kurtz Fencing Inc. uses a job order cost system. The following data summarize the operations related to production for March, the first month of operations: a. Materials purchased on account, $28,790. b. Materials requisitioned and factory labor used: Job Materials Factory Labor 301 $2,880 $2,910 302 3,690 3,860 303 2,300 1,780 304 7,820 6,990 305 5,310 5,050 306 3,700 3,280 For general factory use 1,070 4,180 c. Factory overhead costs incurred on account, $5,600. d. Depreciation of machinery and equipment, $1,970. e. The factory overhead rate is $53 per machine hour. Machine hours used: Job Machine Hours 301 25 302 34 303 30 304 71 305 42 306 26 Total 228 f. Jobs completed: 301, 302, 303 and 305. g. Jobs were shipped and customers were billed as follows: Job 301, $8,270; Job 302, $11,720; Job 303, $15,730. Required: 1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on March 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles. 2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month. For grading purposes enter transactions in alphabetical order. Determine the correct ending balance. The ending balance label is provided on the left side of the T account even when the ending balance is a credit. The unused cell on the balance line should be left blank. 3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.* 4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.* *Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries.
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.
a. Materials purchased on account, $28,790. | |
b. Materials requisitioned and factory labor used: |
Job
|
Materials
|
Factory Labor
|
301 | $2,880 | $2,910 |
302 | 3,690 | 3,860 |
303 | 2,300 | 1,780 |
304 | 7,820 | 6,990 |
305 | 5,310 | 5,050 |
306 | 3,700 | 3,280 |
For general factory use | 1,070 | 4,180 |
c. |
|
d. |
|
e. The factory overhead rate is $53 per machine hour. Machine hours used: |
Job | Machine Hours |
301 | 25 |
302 | 34 |
303 | 30 |
304 | 71 |
305 | 42 |
306 | 26 |
Total | 228 |
f. Jobs completed: 301, 302, 303 and 305. | |
g. Jobs were shipped and customers were billed as follows: Job 301, $8,270; Job 302, $11,720; Job 303, $15,730. |
Required: | |||
1. | |||
2. | |||
3. | Prepare a schedule of unfinished jobs to support the balance in the work in process account.* | ||
4. | Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.*
|
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