Telstar uses job order costing. The T-accounts below summarize its production activity for the year. Raw Materials Inventory Factory Wages Payable Debit Credit Debit Credit 45,700 126,700 24,950 8,700 Work in Process Inventory Debit Credit 24,950 86,450 103,384 171,020 1. Compute the amount for each of the following. Direct materials used. Indirect materials used Direct labor used 86,450 40,950 Finished Goods Inventory Debit Credit 171,020 15,39,90 Indirect labor used Cost of goods manufactured Cost of goods sold (before closing over- or underapplied overhead) 2. Compute the amount that overhead is overapplied or underapplied. Factory Overhead 8,700 40,950 62,070 Debit Credit 103,384
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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