Libo Company manufactures leather bags and uses the job order cost system. Its work in process show: Direct materials used P341,000 Direct labor cost 324,500 Factory overhead 259,600 Transferred to finished goods 825,000 Two jobs are still in process, upon which direct materials of P70,400 have been expended. Factory overhead is applied at a predetermined percentage of direct labor cost. How much is the direct material cost component on the jobs transferred to the finished goods?
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.
Libo Company manufactures leather bags and uses the
Direct materials used P341,000
Direct labor cost 324,500
Factory overhead 259,600
Transferred to finished goods 825,000
Two jobs are still in process, upon which direct materials of P70,400 have been expended. Factory overhead is applied at a predetermined percentage of direct labor cost.
How much is the direct material cost component on the jobs transferred to the finished goods?
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