Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the cutting process. The followin information is available regarding its May inventories. Raw materials inventory Work in process inventory-Cutting 213,500 Work in process inventory-Stitching 233,300 Finished goods inventory 54,100 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit $ 110,000 Direct materials used-Cutting 26,000 Direct materials used-Stitching O Direct labor Direct labor-Cutting $ 24,100 Direct labor-Stitching 96,400 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs Factory Overhead Rates Cutting Stitching Sales Beginning Inventory Ending Inventory $ 91,000 $ 110,200 $ 64,800 58,400 64,000 150% of direct materials used 120% of direct labor used $ 936,000 Record cost of goods sold for May. Note: Enter debits before credits. 145,500 113,200 42,250
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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