Prepare the journal entries for the following transactions in a transportation Company: Purchased supplies costing $2,000 for cash. Used supplies costing $700. Incurred and paid 3,000 hours of direct labor and 1,000 hours of indirect labor. The average hourly wage rate for both direct and indirect labor is $10. Received and paid an insurance bill of $750. Made monthly rent payment of $2,500. Applied overhead at $5 per direct labor hour. All work-in- process services was moved to cost of services and customers were billed at a rate of $22 per direct labor hour. Closed all over- or underapplied overhead to Cost of Services.
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.
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