McAllister, Inc. employs a normal costing system. The following information pertains to the year just ended.• Total manufacturing costs were $2,500,000.• Cost of goods manufactured was $2,425,000.• Applied manufacturing overhead was 30 percent of total manufacturing costs.• Manufacturing overhead was applied to production at a rate of 80 percent of direct-labor cost.• Work-in-process inventory on January 1 was 75 percent of work-in-process inventory on December 31.Required:1. Compute the total direct-labor cost for the year.2. Calculate the total cost of direct material used during the year.3. Compute the value of the company’s work-in-process inventory on December 31.
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.
McAllister, Inc. employs a normal costing system. The following information pertains to the year just ended.
• Total
• Cost of goods manufactured was $2,425,000.
• Applied manufacturing
• Manufacturing overhead was applied to production at a rate of 80 percent of direct-labor cost.
• Work-in-process inventory on January 1 was 75 percent of work-in-process inventory on December 31.
Required:
1. Compute the total direct-labor cost for the year.
2. Calculate the total cost of direct material used during the year.
3. Compute the value of the company’s work-in-process inventory on December 31.
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