Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following. Prepare journal entries for manufacturing costs. Job Number Materials Labor Requisition Slips Time Tickets 429 $2,500.00 $1,900 430 3,500 3,000 431 4,400 7,600 General use 800 1200 Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month. Instructions a. Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429. b. Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets. (Use a T-account.) c. Were the manufacturing overhead costs over- or under-applied?
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.
| Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following. | |||||||||
| Prepare |
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| Job Number | Materials | Labor | |||||||
| Requisition Slips | Time Tickets | ||||||||
| 429 | $2,500.00 | $1,900 | |||||||
| 430 | 3,500 | 3,000 | |||||||
| 431 | 4,400 | 7,600 | |||||||
| General use | 800 | 1200 | |||||||
| Stine Company applies manufacturing |
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| Instructions | |||||||||
| a. Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429. | |||||||||
| b. |
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| c. Were the manufacturing overhead costs over- or under-applied? | |||||||||
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