Richards company employs a job order costing system. Only three jobs- Job 3205, Job #206, and job #207 - were worked on during January and February. Job #205 was completed February 10; the other two jobs were still in production on February 28, the end of the company's operating year. Job cost sheets on the three jobs follow: Job cost sheet January cost incurred: Job #205 Job #206 Job #207 Direct material 16,500 9,300 - Direct labor 13,000 7,000 - Manufacturing overhead 20,800 11,200 - February cost incurred: Direct materials - 8,200 21,300 Direct labor 4,000 6,000 10,000 Manufacturing overhead ? ? ? The following additional information is available: A. Manufacturing overhead is assigned to jobs on the basis of direct labor cost. B. Balances in the inventory accounts at January 31 were as follows: Raw Material $40,000 Work in Process ? Finished Goods 85,000
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.
Richards company employs a
Job cost sheet
January cost incurred: Job #205 Job #206 Job #207
Direct material 16,500 9,300 -
Direct labor 13,000 7,000 -
Manufacturing
February cost incurred:
Direct materials - 8,200 21,300
Direct labor 4,000 6,000 10,000
Manufacturing overhead ? ? ?
The following additional information is available:
A. Manufacturing overhead is assigned to jobs on the basis of direct labor cost.
B. Balances in the inventory accounts at January 31 were as follows:
Raw Material $40,000
Work in Process ?
Finished Goods 85,000
How much is the balance of work in process as of January 31?
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