The Robbins Company manufactures special purpose machines to order. On January 1, there were two jobs in process, #705 and #706. The following costs were applied to these jobs in the prior year:
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 Robbins Company manufactures special purpose machines to order. On January 1, there were two
jobs in process, #705 and #706. The following costs were applied to these jobs in the prior year:
Job No.
705
$ 5,000
706
$ 8,000
Direct material
Direct labor
Overhead
Total
4,000
3,000
4,400
3,300
$13,400
$14,300
During January, the following transactions took place:
Raw material costing $40,000 was purchased on account.
Jobs #707, #708, and #709 were started and the following costs were applied to
them:
JOB
707
708
$10,000
709
$7,000
4,000
Direct materials
$3,000
Direct labor
5,000
6,000
Job #705 and Job #706 were completed after incurring additional direct labor costs
of $2,000 and $4,000, respectively
Wages paid to production employees during January totaled $25,000.
Depreciation for the month of January totaled $10,000.
Utilities bills in the amount of $10,000 were paid for operations during December.
Utilities bills totaling $12,000 were received for January operations.
Supplies costing $2,000 were used.
Miscellaneous overhead expenses totaled $24,000 for January.
Actual overhead is applied to individual jobs at the end of each month using a rate based on actual
direct labor costs.
Requirement:
1. Determine the January overhead rate.
Determine the cost of each job.
3. Determine the total cost of goods manufactured.
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