Prepare journal entries to record the following activities of the company for March. Assume the company uses a perpetual inventory system. i. The accumulation of raw materials costs and manufacturing overhead costs. (Item 1,5 & 6 from above) ii. The assignment of raw materials, factory labor costs to production. (Item 3 & 4) iii. The assignment of manufacturing overhead costs to production using the predetermined overhead rate based on machine hours. (Item 7) iv. The completion of Job No. 126 and Job No. 127. v. The sale of Job No. 126 on the account. b. Prepare the journal entry to adjust for the underapplied or overapplied overhead. Assume the amount is considered immaterial.
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.
Cheung’s Company uses a
1. Raw materials were purchased on account for $75,000.
2. Jobs 127 and 128 were started during the month.
3. Raw materials totaling $70,000 were requisitioned for use in production. Of this total,
$8,000 was for indirect materials. The direct materials were distributed as follows:
Job No. 126 $16,000
Job No. 127 $32,000
Job No. 128 $14,000
4.
Job No. 126 $33,000
Job No. 127 $75,000
Job No. 128 $25,000
5. The company had a
6. Other manufacturing costs (excluding direct materials and direct labor) incurred but not
paid totaled $27,000.
7. Manufacturing overhead was applied using the predetermined overhead rate. The following is the distribution of machine-hours (MH) for March:Job No. 126 550 MH
Job No. 127 800 MH
Job No. 128 650 MH
8. Job No. 126 and Job No. 127 were completed during the month.
9. Job No. 126 was sold on account during March at a selling price of $154,800.
Beginning balance as of March 1 were as follows:
Materials $ 6,500
Work in process (Job No.126) 15,000
Finished goods 7,000
a. Prepare journal entries to record the following activities of the company for March. Assume the company uses a perpetual inventory system.
i. The accumulation of raw materials costs and manufacturing overhead costs. (Item 1,5 & 6 from above)
ii. The assignment of raw materials, factory labor costs to production. (Item 3 & 4)
iii. The assignment of manufacturing overhead costs to production using the predetermined overhead rate based on machine hours. (Item 7)
iv. The completion of Job No. 126 and Job No. 127.
v. The sale of Job No. 126 on the account.
b. Prepare the
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