Question 3 Teratoor Space provides interior design services in Bandar Teemor. It uses a job order costing system to accept orders from the customers. The manufacturing overhead cost is absorbed based on direct labour hour. The budgeted manufacturing overhead cost for the month of January is RM96,500. Management expects a total of 19,300 direct labour hours will be used. Prepare journal entries for the month of January: Jan Particular 13 19 22 Purchase 200 boxes of direct material from Bharatt on credit for RM4,200. 55 boxes of direct material was requested from the store for production. It was bought for RM11.50 per box. The decoration section has purchased 240 boxes indirect material which cost RM26.10 per box from Otara by cash. Direct labour cost paid for the month of January amounted to RM5,900. 26 The depreciation cost of delivery van for the month of January is RM770. 30 For the month of January, a total of 6,300 direct labour hours have been utilised.
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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