The following are the job cost related accounts for the law firm of Oriole Associates and their manufacturing equivalents: Manufacturing Firm Accounts Raw Materials Factory Wages Payable Manufacturing Overhead Work in Process Cost of Goods Sold Law Firm Accounts Supplies Salaries and Wages Payable Operating Overhead Service Contracts in Process Cost of Completed Service Contracts Cost data for the month of March follow. 1. 2. 3. 4. 5. 6. Purchased supplies on account $2,040. Issued supplies $1,410 (60% direct and 40 % indirect). Assigned labor costs based on time cards for the month which indicated labor costs of $77,000 (80 % direct and 20% indirect). Operating overhead costs incurred for cash totaled $44,000. Operating overhead is applied at a rate of 90% of direct labor cost. Work completed totaled $82,500.
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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