Re - Tire produces bagged mulch from recycled tires. Production involves shredding tires and packaging the pieces in the Bagging department. All direct materials enter in the Shredding process. A predetermined overhead rate of 185% of direct labor costs is used in both departments. The following describes production operations for October. Direct materials used (Shredding) $ 224,000 Direct labor used (Shredding) 37, 800 Direct labor used (Bagging) 70, 200 Costs transferred from Shredding to Bagging 202,000 Costs transferred from Bagging to Finished Goods 596,000 Sales (on credit) for the month total $450,000 and cost of goods sold for the month is $250,000. Prepare journal entries dated October 31 to record October production activities for (1) direct materials usage, (2) direct labor usage, (3) overhead applied, (4) costs transfer from Shredding to Bagging, (5) costs transfer from Bagging to finished goods, (6) credit sales, and (7) cost of goods sold.
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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