Shah Taj Engineering Works on April 5, 2006 started production of 100 lawnmower of model EG- 72 ordered by Capital Development Authority. Islamabad, vide Order No. 2119-M dated April 1, 2006 at a price of Rs. 3,600 per lawn mower. Production Planning Department allotted Job No. J-832-LM and instructed the factory to complete production by April 20, 2006. However, the factory completed production on April 18, 2006. On April 11, weekly Materials Requisitions Summary. No. MRS-16 and weekly Labor Cost Analysis Sheet No.LAS-16 showed following charges to Job No. J-832-LM. Department 101 Department 102 Direct materials Rs. 58,500 11,700 Direct labor Rs. 13,500 15,750 (900 hours) Materials Requisitions Summary No. MRS-17 and Labor Cost Analysis Sheet No. LAS-17 prepared on April 18 revealed following direct costs for the job. Department 101 Department 102 Direct materials Rs.71,500 Rs. 14,300 Direct labor Rs. 16,500 Rs. 19,250 (1100 hours) In department 101 factory overhead is applied @ 50% of direct labor cost and in department 102 @ Rs. 12 per direct labor hour. Marketing and administration expenses chargeable to the job were respectively 7.5 % and 5% of the sale price. The lawn mowers were delivered to customer on April 22, 2006 Required: Prepare a Job Cost Sheet for Job No. J-832-LM.
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.
Shah Taj Engineering Works on April 5, 2006 started production of 100 lawnmower of model EG- 72 ordered by Capital Development Authority. Islamabad, vide Order No. 2119-M dated April 1, 2006 at a price of Rs. 3,600 per lawn mower.
Production Planning Department allotted Job No. J-832-LM and instructed the factory to complete production by April 20, 2006. However, the factory completed production on April 18, 2006.
On April 11, weekly Materials Requisitions Summary. No. MRS-16 and weekly Labor Cost Analysis Sheet No.LAS-16 showed following charges to Job No. J-832-LM.
Department 101 Department 102
Direct materials Rs. 58,500 11,700
Direct labor Rs. 13,500 15,750
(900 hours)
Materials Requisitions Summary No. MRS-17 and Labor Cost Analysis Sheet No. LAS-17 prepared on April 18 revealed following direct costs for the job.
Department 101 Department 102
Direct materials Rs.71,500 Rs. 14,300
Direct labor Rs. 16,500 Rs. 19,250
(1100 hours)
In department 101 factory
Required:
- Prepare a
Job Cost Sheet for Job No. J-832-LM. - Assuming that J-832-LM was the only job worked on during the two weeks period, pass account entries in General Journal form to record:
- (a). Cost incurred on the job:
- (b). Completion of the job; and
- (c). Sale of the job.
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