Preparing job order costing journal entries Journalize the following transactions for Marge’s Sofas. Explanations are not required. Incurred and paid Web site expenses, $2,000. incurred manufacturing wages of $15,000, 75% of which was direct labor and 25% of which was indirect labor. Purchased raw materials on account, $24,000. Used in production: direct materials, $7,500; indirect materials, $5,000. Recorded manufacturing overhead: depreciation on plant, $18,000; plant insurance (previously paid), $1,500; plant property tax, $3,900 (credit Property Tax Payable). Allocated manufacturing overhead to jobs, 200% of direct labor costs. Completed production on jobs with costs of $40,000. Sold inventory on account, $22,000; the cost of goods sold, $18,000. Adjusted for overallocated or under-allocated overhead.
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.
Preparing job order costing
Journalize the following transactions for Marge’s Sofas. Explanations are not required.
- Incurred and paid Web site expenses, $2,000.
- incurred manufacturing wages of $15,000, 75% of which was direct labor and 25% of which was indirect labor.
- Purchased raw materials on account, $24,000.
- Used in production: direct materials, $7,500; indirect materials, $5,000.
- Recorded manufacturing
overhead :depreciation on plant, $18,000; plant insurance (previously paid), $1,500; plant property tax, $3,900 (credit Property Tax Payable). - Allocated manufacturing overhead to jobs, 200% of direct labor costs.
- Completed production on
jobs with costs of $40,000. - Sold inventory on account, $22,000; the cost of goods sold, $18,000.
- Adjusted for overallocated or under-allocated overhead.
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