The general ledger of Daedalus Ltd, a manufacturing firm operating a job cost system, included the following balances at May 31: $ Raw Materials Control 35,000 Labour Control 3,375 (Cr.) Factory Overhead Applied 420 (Cr.) Work In Process 16,150 Finished Goods 17,075 Particulars of jobs in process and the job completed were: Job No. Material Labour Overhead Total In process 323 $ 6,750 $ 3,000 $ 3,600 $ 13,350 324 1,700 500 600 2,800 Completed 322 6,350 4,875 5,850 17,075 During the month of June the following transactions occurred: $ $ Materials purchased on credit 24,700 Factory wages paid - Gross 29,000 - PAYG Tax 6,700 22,300 Factory rent paid 2,500 Invoices for sundry factory overhead items 2,000 Depreciation at 15% per annum is to be charged on factory plant valued at $160,000. Material issued to the factory and labour charged for the month were: Job No. Material Labour 323 $ nil $ 1,175 324 5,600 4,400 325 12,000 9,250 326 4,500 1,000 Indirect 3,000 9,800 25,100 25,625 Factory overhead is applied using a rate of 120% of direct labour cost. Any over/under-applied overhead is transferred to cost of goods sold at June 30. At 30 June, Job No. 326 was incomplete. Job Nos 322, 323 and 324 had been completed and sold on credit, while Job No. 325 was still in the finished goods warehouse. The jobs sold had a total sales value of $81,744. REQUIRED: ( a ) Prepare a Job Card Cost Summary for June . ( b ) Prepare and balance the following accounts (a single ledger is used): ( i )Raw Materials Control( ii )Labour Control ( iii ) Factory Overhead Control ( iv ) Factory Overhead Applied ( v ) Work in Process ( v ) Finished Goods
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 general ledger of Daedalus Ltd, a manufacturing firm operating a
|
|
$ |
|
|
Raw Materials Control |
35,000 |
|
|
Labour Control |
3,375 |
(Cr.) |
|
Factory |
420 |
(Cr.) |
|
Work In Process |
16,150 |
|
|
Finished Goods |
17,075 |
|
Particulars of jobs in process and the job completed were:
|
|
Job No. |
Material |
Labour |
Overhead |
Total |
|
In process |
323 |
$ 6,750 |
$ 3,000 |
$ 3,600 |
$ 13,350 |
|
|
324 |
1,700 |
500 |
600 |
2,800 |
|
Completed |
322 |
6,350 |
4,875 |
5,850 |
17,075 |
During the month of June the following transactions occurred:
|
|
$ |
$ |
|
|
Materials purchased on credit |
|
24,700 |
|
|
Factory wages paid |
- Gross |
29,000 |
|
|
|
- PAYG Tax |
6,700 |
22,300 |
|
Factory rent paid |
|
2,500 |
|
|
Invoices for sundry factory overhead items |
|
2,000 |
Material issued to the factory and labour charged for the month were:
|
Job No. |
Material |
Labour |
|
323 |
$ nil |
$ 1,175 |
|
324 |
5,600 |
4,400 |
|
325 |
12,000 |
9,250 |
|
326 |
4,500 |
1,000 |
|
Indirect |
3,000 |
9,800 |
|
|
25,100 |
25,625 |
Factory overhead is applied using a rate of 120% of direct labour cost. Any over/under-applied overhead is transferred to cost of goods sold at June 30. At 30 June, Job No. 326 was incomplete. Job Nos 322, 323 and 324 had been completed and sold on credit, while Job No. 325 was still in the finished goods warehouse. The jobs sold had a total sales value of $81,744.
REQUIRED:
( a ) Prepare a Job Card Cost Summary for June .
( b ) Prepare and balance the following accounts (a single ledger is used):
( i )Raw Materials Control( ii )Labour Control
( iii ) Factory Overhead Control ( iv ) Factory Overhead Applied
( v ) Work in Process ( v ) Finished Goods
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