s at P18 per hour Overhead – 2 hours (variable P6; Fixed P10) Overhead is applied to production on the basis of direct labor hours. Normal capacity for the quarter was 9,000 direct labor hours. During the quarter, the following transactions related to the job occurred: a. Purchased 12,400 pounds of raw materials on account at P7.20 per pound b. Issued 12,400 pounds of raw materi
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.
A Manufacturing Company uses standard costs with its
accounting system. During the third quarter of 2010, an order of 4,000 units of Product
Echo (Job. 3-3003) was accepted from a longtime customer. The
produce a unit is given below:
Direct materials – 3.0 lbs at P8.00 per pound
Direct labor – 2 hours at P18 per hour
Overhead – 2 hours (variable P6; Fixed P10)
Overhead is applied to production on the basis of direct labor hours. Normal capacity for
the quarter was 9,000 direct labor hours.
During the quarter, the following transactions related to the job occurred:
a. Purchased 12,400 pounds of raw materials on account at P7.20 per pound
b. Issued 12,400 pounds of raw materials to production
c. Incurred 7,600 hours of direct labor at P18.40 per hour
d. Manufacturing overhead incurred for the quarter totaled P135,300.
e. Applied overhead to production.
f. Transferred completed jobs to Finished Goods.
g. Billed the customer at cost plus 60% mark-up on cost.
REQUIRED:
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