Problem 17: Predetermined Factory Overhead rate and Journal Entries Radiohead Corporation, which uses the job order costing system, had two jo in process at the start of the year 2030: Job 101-P570,000 and Job 102 P237,000. The following information is available: ● ● Radiohead applies factory overhead on the basis of machine hour Budgeted factory overhead and machine activity for the year we estimated to be P P4,320,000 and 120,000 hours, respectively. The company worked on three jobs during the first quarter. Dire materials used, direct labor incurred, and machine hours consume were: Direct Materials 108,000 222,000 Factory overhead during the first quarter included charges for depreciatic amounting P120,000; indirect labor P300,000; indirect materials used P24,00 and other factory costs of P252,000. Radiohead completed job nos. 101 ar 102. Job no. 101 was sold for cash, producing a gross profit of P147,600. Job Number 101 102 103 Direct Labor 270,000 150,0000 210,000 Machine Hours 5,400 3,600 7,200 Required: 1. Determine the company's predetermined factory overhead rate. 2. Prepare journal entries to record the above transactions
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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