ro-Weave manufactures stadium blankets by passing the products through a weaving department and then a sewing department. The following information is available regarding its June inventories: Beginning Inventory Ending Inventory Raw materials inventory $ 198,000 $ 217,000 Work in process inventory—Weaving 380,000 380,000 Work in process inventory—Sewing 670,000 700,000 Finished goods inventory 1,276,000 1,256,000 The following additional information describes the company’s manufacturing activities for June: Raw materials purchases (on credit) $ 590,000 Other actual overhead cost (paid in cash) 172,000 Materials used Direct—Weaving $ 310,000 Direct—Sewing 78,000 Indirect 162,000 Labor used Direct—Weaving $ 1,275,000 Direct—Sewing 540,000 Indirect 1,625,000 Overhead rates as a percent of direct labor Weaving 90% Sewing 160% Sales (on credit) $ 4,700,000 rev: 05_27_2021_QC_CDR-376 Required: 1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold. Hint: Compute the total production costs in each department and then subtract the ending inventory to get the amount transferred out of each department. 2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, (c) sale of finished goods, and (d) cost of goods sold. 3. Prepare journal entries dated June 30 to record: (a) raw materials purchases, (b) direct materials used, (c) indirect materials used, (d) direct labor used, (e) indirect labor used, (f) other actual overhead costs, and (g) overhead applied
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.
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and then a sewing department. The following information is available regarding its June inventories:
| Beginning Inventory | Ending Inventory | |
|---|---|---|
| Raw materials inventory | $ 198,000 | $ 217,000 |
| Work in process inventory—Weaving | 380,000 | 380,000 |
| Work in process inventory—Sewing | 670,000 | 700,000 |
| Finished goods inventory | 1,276,000 | 1,256,000 |
The following additional information describes the company’s manufacturing activities for June:
| Raw materials purchases (on credit) | $ 590,000 |
|---|---|
| Other actual |
172,000 |
| Materials used | |
| Direct—Weaving | $ 310,000 |
| Direct—Sewing | 78,000 |
| Indirect | 162,000 |
| Labor used | |
| Direct—Weaving | $ 1,275,000 |
| Direct—Sewing | 540,000 |
| Indirect | 1,625,000 |
| Overhead rates as a percent of direct labor | |
| Weaving | 90% |
| Sewing | 160% |
| Sales (on credit) | $ 4,700,000 |
rev: 05_27_2021_QC_CDR-376
Required:
1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold. Hint: Compute the total production costs in each department and then subtract the ending inventory to get the amount transferred out of each department.
2. Prepare
3. Prepare journal entries dated June 30 to record: (a) raw materials purchases, (b) direct materials used, (c) indirect materials used, (d) direct labor used, (e) indirect labor used, (f) other actual overhead costs, and (g) overhead applied.
Answer -
Cost of Production :
Cost of production means the total cost incurred by a company incurs from manufacturing a product in a specific quantity of a product or offering a service that generates revenue for the company.
Cost of goods Sold :
The cost of goods sold is the total of all manufacturing costs and expenses directly related to the production of goods to produce those finished goods which have been sold.
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