The following data pertains to Lam Company's manufacturing operations: Inventories 4/1 4/30 Direct Materials $ 18,000 $ 15,000 Work in Process 9,000 6,000 Finished Goods 27,000 36,000 Additional information for the month of April: Direct materials purchased $ 32,000 Direct labor 30,000 Direct labor rate per hour 10.00 Factor overhead incurred 40,000 Overhead is applied at $12 per direct labor hour. For the month of April, conversion cost incurred was: Multiple Choice $75,000. $66,000. $70,000. $39,000. None of these answers are correct.
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.
The following data pertains to Lam Company's manufacturing operations:
| Inventories | 4/1 | 4/30 |
|---|---|---|
| Direct Materials | $ 18,000 | $ 15,000 |
| Work in Process | 9,000 | 6,000 |
| Finished Goods | 27,000 | 36,000 |
Additional information for the month of April:
| Direct materials purchased | $ 32,000 |
|---|---|
| Direct labor | 30,000 |
| Direct labor rate per hour | 10.00 |
| Factor |
40,000 |
Overhead is applied at $12 per direct labor hour.
For the month of April, conversion cost incurred was:
-
$75,000.
-
$66,000.
-
$70,000.
-
$39,000.
-
None of these answers are correct.
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| Inventories | 4/1 | 4/30 | ||||||
| Direct Materials | $ | 19,000 | $ | 15,800 | ||||
| Work in Process | 9,400 | 6,300 | ||||||
| Finished Goods | 28,400 | 38,000 | ||||||
Additional information for the month of April:
| Direct materials purchased | $ | 33,600 | |
| Direct labor | 32,000 | ||
| Direct labor rate per hour | 10 | ||
| Factor |
42,400 | ||
Overhead is applied at $12 per direct labor hour.
For the month of April, prime cost incurred was:
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