Sharpe Company makes organic salsa in two production departments, Cooking and Bottling. Direct materials costs are added at the beginning of each process, and conversion costs are added evenly throughout each process. The company reports the following for a recent month. Beginning work in process inventory Activity during the month Direct materials Direct labor Overhead applied Costs transferred from Cooking to Bottling Costs transferred from Bottling to finished goods Cooking $0 $ 18,000. 12,000 15,000 Bottling $ 5,500 $ 8,200 6,800 8,500 $ 42,000 67,000 1. Prepare journal entries to record (a) direct materials used, (b) direct labor, and (c) overhead applied. 2. Prepare journal entries to record the costs transferred from (a) Cooking to Bottling and (b) Bottling to Finished Goods. 3. Use T-accounts to compute (a) the ending balance of Work in Process Inventory-Cooking and (b) the ending balance of Work in Process Inventory-Bottling.
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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