One Stop Invitations & More does customize, hand-crafted wedding memorabilia, in which each batch of items is a job. The company has a highly labour-intensive production process, so it allocates manufacturing overhead based on direct labour hours. The business expects to incur $2,400,000 of manufacturing overhead costs and to use 40,000 direct labour hours during 20X9. At the end of June 20X9, One Stop Invitations & More reported the following inventories: Raw Materials Inventory Work-in-Progress Inventory Finished Goods Inventory $200,000 $170,000 $110,000 During July 20X9, One Stop Invitations & More actually used 3,000 direct labour hours and recorded the following transactions: i) Purchased materials on account $310,000 ii) Manufacturing wages incurred $400,000 iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000 iv) Assigned manufacturing wages, 90% direct labour, 10% indirect labour v) Other manufacturing overhead incurred $130,000 vi) Allocated manufacturing overhead for July 20X9 vii) Cost of jobs completed $995,000 viii) Cost of jobs sold (on account) at a margin of 33⅓% $960,000 Answer the following: a) Compute One Stop’s predetermined manufacturing overhead rate for 20X9. b) State the journal entries necessary to record the above transactions in the general journal. Assume that One Stop uses the perpetual inventory system. Please follow the format given in the image attached when answering questions a & b.
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.
One Stop Invitations & More does customize, hand-crafted wedding memorabilia, in which each batch of items is a job. The company has a highly labour-intensive production process, so it allocates manufacturing
| Raw Materials Inventory Work-in-Progress Inventory Finished Goods Inventory |
$200,000 $170,000 $110,000 |
During July 20X9, One Stop Invitations & More actually used 3,000 direct labour hours and recorded the following transactions:
i) Purchased materials on account $310,000
| ii) | Manufacturing wages incurred | $400,000 |
| iii) | Materials requisitioned (includes $30,000 of indirect materials) | $420,000 |
| iv) | Assigned manufacturing wages, 90% direct labour, 10% indirect labour |
| v) | Other manufacturing overhead incurred $130,000 |
| vi) | Allocated manufacturing overhead for July 20X9 |
| vii) | Cost of jobs completed $995,000 |
| viii) | Cost of jobs sold (on account) at a margin of 33⅓% $960,000 |
Answer the following:
a) Compute One Stop’s predetermined manufacturing overhead rate for 20X9.
b) State the
Please follow the format given in the image attached when answering questions a & b.
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