Manufacturing Company manufactures different office furniture and accounts for costs using the Job Order Costing System. During the 3rd quarter of the current year, 500 tables (Job Order No. 6-210) are ordered by an international firm. The costs incurred on this job are: Direct Materials P1,250 per unit Direct Labor 5 hours per unit @ P48.00 per hr Manufacturing overhead P50 per direct labor hour Final inspection revealed that 100 tables are defective and these can be reworked requiring 2 hours a unit in addition to overhead. The 500 units are delivered and billed the customer at cost plus 40%. REQUIRED: 1. Give the entries to record the above assuming that the defective job is due to customer specification. 2. Determine the manufacturing cost per unit.
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.
Manufacturing Company manufactures different office furniture and
accounts for costs using the
Direct Materials P1,250 per unit
Direct Labor 5 hours per unit @ P48.00 per hr
Manufacturing overhead P50 per direct labor hour
Final inspection revealed that 100 tables are defective and these can be reworked requiring 2 hours a unit in addition to overhead. The 500 units are delivered and billed the customer at cost plus 40%.
REQUIRED:
1. Give the entries to record the above assuming that the defective job is due to
customer specification.
2. Determine the
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