Sokolov Office Decor produces commercial office furnishing for educational institutions, hospitals, and offices. The company uses a job costing system to record its costs. A recent order for 2,500 sections of wall units had the following costs per unit: Direct materials $300 Direct labour $200 Manufacturing overhead allocated $100 $600 Refer to the original data. Inspectors at the company rejected 200 of the 2,500 wall units due to dents and scratches. The wall units were sold to a local contractor at a discount for $40,000. The contractor used the units to furnish a building. Assume this rejection rate is considered normal. Prepare the journal entry and calculate the unit cost if the rejection is attributable to this particular job. Cost per unit - $634.78 Prepare the journal entry and calculate the unit cost if the rejection is common to all jobs.
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.
- Sokolov Office Decor produces commercial office furnishing for educational institutions, hospitals, and offices. The company uses a
job costing system to record its costs. A recent order for 2,500 sections of wall units had the following costs per unit:
Direct materials $300
Direct labour $200
Manufacturing
$600
- Refer to the original data. Inspectors at the company rejected 200 of the 2,500 wall units due to dents and scratches. The wall units were sold to a local contractor at a discount for $40,000. The contractor used the units to furnish a building. Assume this rejection rate is considered normal.
- Prepare the
journal entry and calculate the unit cost if the rejection is attributable to this particular job. Cost per unit - $634.78
Prepare the journal entry and calculate the unit cost if the rejection is common to all jobs.
- Prepare the
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