The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes: • Purchased $404,710 of materials • Used $344,090 of direct materials in production • Incurred $298,900 of direct labor wages • Applied factory overhead at a rate of 78% of direct labor cost • Transferred $814,310 of work in process to finished goods • Sold goods with a cost of $781,480 • Sold goods for $1,396,720 • Incurred $319,130 of selling expenses • Incurred $120,230 of administrative expenses Required: A. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. B. Determine the inventory balances at the end of the first month of operations.
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.
| • | Purchased $404,710 of materials |
| • | Used $344,090 of direct materials in production |
| • | Incurred $298,900 of direct labor wages |
| • | Applied factory overhead at a rate of 78% of direct labor cost |
| • | Transferred $814,310 of work in process to finished goods |
| • | Sold goods with a cost of $781,480 |
| • | Sold goods for $1,396,720 |
| • | Incurred $319,130 of selling expenses |
| • | Incurred $120,230 of administrative expenses |
| Required: | |
| A. | Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. |
| B. | Determine the inventory balances at the end of the first month of operations. |
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