PLEASE ANSWER THESE 2 QUESTIONS ONLY: 1. RECORD CHANGES TO WORK IN PROGRESS 2. RECO
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.
PLEASE ANSWER THESE 2 QUESTIONS ONLY:
1. RECORD CHANGES TO WORK IN PROGRESS
2. RECORD TRANSFER OF JOB 33
Kim's Asphalt does driveway and parking lot resurfacing work for large commercial clients as well as small residential clients. An inventory of materials and equipment is on hand at all times so that work can start as quickly as possible. Special equipment is ordered as required. On May 1, the Materials and Equipment Inventory account had a balance of $38,000. The Work-in-Process Inventory account is maintained to record costs of work not yet complete. There were two such jobs on May 1 with the following costs.
| Job 27 Highlands Mall |
Job 33 Pine Ridge Estates |
|||||
| Materials and equipment | $ | 15,675 | $ | 52,700 | ||
| Direct labor | 13,700 | 26,350 | ||||
| 4,110 | 7,905 | |||||
Overhead has been applied at 30 percent of the costs of direct labor.
During May, Kim's Asphalt started two new jobs. Additional work was carried out on Jobs 27 and 33, with the latter completed and billed to Pine Ridge Estates. Details on the costs incurred on jobs during May follow.
| Job | 27 | 33 | 34 | 35 | ||||||||
| Materials and equipment | $ | 3,200 | $ | 5,000 | $ | 4,800 | $ | 3,100 | ||||
| Direct labor (wages payable) | 4,700 | 6,950 | 6,100 | 1,800 | ||||||||
Other May Events
- Received $12,700 payment on Job 24 delivered to customer in April.
- Purchased materials and equipment for $9,600 on account.
- Billed Pine Ridge Estates $132,000 and received payment for $85,000 of that amount.
- Determined that payroll for indirect labor personnel totaled $670.
- Issued supplies and incidental materials for current
jobs costing $175. - Recorded overhead and advertising costs for the operation as follows (all cash except equipment
depreciation ).
| Property taxes | $ | 570 | |
| Storage area rental | 695 | ||
| Truck and delivery cost | 340 | ||
| Advertising and promotion campaign | 620 | ||
| Inspections | 220 | ||
| Telephone and other miscellaneous | 345 | ||
| Equipment depreciation | 470 | ||
Required:
a. Prepare
b. Calculate the amount of over- or underapplied overhead for the month.
c. Determine inventory balances for Materials and Equipment Inventory and Work-in-process inventory.
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