TATA Inc. is engaged in the business of manufacturing basketballs. The company employs an actual costing system. The company uses a single account for direct and indirect materials. The company provided the following data for the year ended December 31, 2016: Gross sales 9,500,000 Sales return 500,000 Gross purchase 1,000,000 Purchase returns, allowance and discount 200,000 Freight in. 400,000 Total costs of factory labor 1,000,000 Depreciation of factory assets 300,000 Expired insurance of factory assets 100,000 Utilities expense on factory 500,000 Total administrative expenses 2,000,000 Total marketing expenses 3,000,000 Inventories are as follows: January 1 December 31 Raw materials 100,000 300,000 Work in process. ? 200,000 Finished goods. 500,000 600,000 The following additional data are provided: 1. The net profit ratio of the company before income tax for the year ended December 31, 2016, was 10% of net sales. 2. The direct labor costs for the year was four times the cost of indirect labor 3. The cost of indirect materials used was P100,000 What is the cost of work in process on January 1, 2016?
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.
TATA Inc. is engaged in the business of manufacturing basketballs. The company employs an actual costing system. The company uses a single account for direct and indirect materials. The company provided the
following data for the year ended December 31, 2016:
| Gross sales | 9,500,000 |
| Sales return | 500,000 |
| Gross purchase | 1,000,000 |
| Purchase returns, allowance and discount | 200,000 |
| Freight in. | 400,000 |
| Total costs of factory labor | 1,000,000 |
| 300,000 | |
| Expired insurance of factory assets | 100,000 |
| Utilities expense on factory | 500,000 |
| Total administrative expenses | 2,000,000 |
| Total marketing expenses | 3,000,000 |
Inventories are as follows:
| January 1 | December 31 | |
| Raw materials | 100,000 | 300,000 |
| Work in process. | ? | 200,000 |
| Finished goods. | 500,000 | 600,000 |
The following additional data are provided:
1. The net profit ratio of the company before income tax for the year ended December 31, 2016, was 10% of net sales.
2. The direct labor costs for the year was four times the cost of indirect labor
3. The cost of indirect materials used was P100,000
What is the cost of work in process on January 1, 2016?
(answer in good accounting form is much appreciated. thanks)
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