Prepare a cost of production report for April. Prepare journal entries to record: (1) The transfer of the 2,000 file cabinets from the Drawer Assembly Department into the Lock Assembly Department. (2) Manufacturing costs charged to the Lock Assembly Department during April. (3) Transfer of the completed file cabinets from the Lock Assembly Department to the Painting Department.
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.
Desert File Cabinet U.S.A., a manufacturer of metal filing cabinets, uses a
Summary of Units
Beginning Work in Process ................................................ 500
Units transferred in from Drawer Dept. during April........... 2,000
Ending Work in Process (50% complete as to conversion costs) 400
Units completed and transferred to Painting Dept. during April 2,100
Summary of Costs
Beginning Work in Process:
(transferred-in Costs, $20,000; conversion costs, $850) $ 20,850
Costs transferred in from Drawer Assembly Dept.......... 104,000
Direct materials ................................................... 12,600
Conversion costs.................................................. 9,500
Total costs to account for........................................... $146,950
Instructions:
- Prepare a cost of production report for April.
- Prepare
journal entries to record:
(1) The transfer of the 2,000 file cabinets from the Drawer Assembly Department into the Lock Assembly Department.
(2) Manufacturing costs charged to the Lock Assembly Department during April.
(3) Transfer of the completed file cabinets from the Lock Assembly Department to the Painting Department.
Post the above entries to a “T” account, making sure it balances with the amount you assigned to ending work in process on the cost of production report.
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