The transactions that flow through the accounts in job-order costing are entered into the accounting system by making journal entries and posting them to the accounts. Let's complete this process for the various transactions that occurred during the month of January for Healthy Choice Pastries and Cakes. Purchased raw materials costing P125,000. Requisitioned materials costing P75,000 for use in production. Recognized direct labor costing P76,500 (i.e. it was not paid in cash but was shown as a liability in the wages payable). Applied overhead to production at the rate of P200 per direct labor hour. A total of 85 direct labor hours were worked. Incurred actual overhead costs of P20,750. Completed Job 101 (elegant wedding cake) and transferred it to Finished Goods. Sold the wedding cake jo
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 transactions that flow through the accounts in job-order costing are entered into the accounting system by making
- Purchased raw materials costing P125,000.
- Requisitioned materials costing P75,000 for use in production.
- Recognized direct labor costing P76,500 (i.e. it was not paid in cash but was shown as a liability in the wages payable).
- Applied
overhead to production at the rate of P200 per direct labor hour. A total of 85 direct labor hours were worked. - Incurred actual overhead costs of P20,750.
- Completed Job 101 (elegant wedding cake) and transferred it to Finished Goods.
- Sold the wedding cake
job at cost plus 50%. The customer agrees to pay after two weeks time. - Check the overhead control account. Close the overhead variance to Cost of Goods Sold.
Required:
- Journalize the transactions enumerated above.
- Summarize the journal entries and post them to the appropriate ledger accounts.
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