The Prancing Pony utilizes a job-order costing system for accumulating their product costs. They had the following jobs during the month: Job A Job B Job C Job D Beginning balance 67,700 77,200 23,000 55,100 Direct materials used 92,800 67,000 60,500 75,900 Direct labor 47,400 80,300 81,100 83,900 Applied manufacturing overhead 97,000 10,300 14,900 81,500 Job A was unfinished at the end of the period. Job B and D were finished, and subsequently sold. Job C was finished, but had not yet been sold at the end of the period. The time ticket record revealed that Employee Underhill worked on Job A, while Employee Baggins worked on Job B, C, and D. Each job represents a small batch of 400 units. As the manager for The Prancing Pony, you previously set and communicated with employees that in order to meet budgetary goals, each unit should require no more than $150 of direct labor and $200 of direct materials. Using the information provided, what is the reported cost of goods sold expense?
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 Prancing Pony utilizes a
| Job A | Job B | Job C | Job D | |
| Beginning balance | 67,700 | 77,200 | 23,000 | 55,100 |
| Direct materials used | 92,800 | 67,000 | 60,500 | 75,900 |
| Direct labor | 47,400 | 80,300 | 81,100 | 83,900 |
| Applied manufacturing |
97,000 | 10,300 | 14,900 | 81,500 |
Job A was unfinished at the end of the period. Job B and D were finished, and subsequently sold. Job C was finished, but had not yet been sold at the end of the period. The time ticket record revealed that Employee Underhill worked on Job A, while Employee Baggins worked on Job B, C, and D.
Each job represents a small batch of 400 units. As the manager for The Prancing Pony, you previously set and communicated with employees that in order to meet budgetary goals, each unit should require no more than $150 of direct labor and $200 of direct materials.
Using the information provided, what is the reported cost of goods sold expense?
The cost of goods sold includes the cost of jobs that are sold during the period. The ending inventory comprises the units that remain unsold or unfinished.
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