Starbird Manufacturing makes accessories for kitchens and home offices. Their Work-In-Process Inventory account had a debit balance of $32,500 on February 1. Also on February 1, Starbird’s job cost sheets reported these amounts: Customer/Job Geller Thomas Easton Direct materials $7300 $4100 $400 Direct labor 5500 3600 250 Mfg overhead 6500 4400 450 Totals: 19300 12100 1100 During the month of February, Starbird purchased $13,000 of raw materials on account, and on February 29 they paid all of their employees’ wages for hours worked in February. They also incurred miscellaneous overhead costs of (meaning they received the bills for) $8,400 on account. Their February materials requisition slips and employee time tickets showed: Materials Customer/Job Requisition Slips Time tickets Thomas $900 $1100 Macintosh 2200 1400 Easton 500 750 Geller 3500 2800 Total direct 7100 6050 Total indirect 1750 1400 $8850 $7450 Starbird applied overhead to each job at a rate of 125% of direct labor cost. The jobs for Geller and Thomas were completed in February. REQUIRED: Show your reconciliation of the February 29 Work-In-Process Inventory balance with the costs of the unfinished 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.
Starbird Manufacturing makes accessories for kitchens and home offices. Their Work-In-Process Inventory account had a debit balance of $32,500 on February 1. Also on February 1, Starbird’s
|
Customer/Job |
|||
| Geller | Thomas | Easton | |
| Direct materials | $7300 | $4100 | $400 |
| Direct labor | 5500 | 3600 | 250 |
| Mfg |
6500 | 4400 | 450 |
| Totals: | 19300 | 12100 | 1100 |
During the month of February, Starbird purchased $13,000 of raw materials on account, and on February 29 they paid all of their employees’ wages for hours worked in February. They also incurred miscellaneous overhead costs of (meaning they received the bills for) $8,400 on account.
Their February materials requisition slips and employee time tickets showed:
| Materials | ||
| Customer/Job | Requisition Slips | Time tickets |
| Thomas | $900 | $1100 |
| Macintosh | 2200 | 1400 |
| Easton | 500 | 750 |
| Geller | 3500 | 2800 |
| Total direct | 7100 | 6050 |
| Total indirect | 1750 | 1400 |
| $8850 | $7450 |
Starbird applied overhead to each job at a rate of 125% of direct labor cost. The jobs for Geller and Thomas were completed in February.
REQUIRED:
Show your reconciliation of the February 29 Work-In-Process Inventory balance with the costs of the unfinished jobs.
As the cost of unfinished jobs is equal to the cost of Macintosh and Easton, so the reconciliation of February 29 Work-In-Process Inventory balance is as follows:
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