Toys R Us manufactures customized dolls. The following are the transactions for the month of May: Purchased $10,000,000 of raw materials on account. Paid for payroll P12,000,000: indirect labor $200,000 and direct labor $5,000,000 60% of which went to Job 11 Customer Toy Kingdom and the balance to Job 12 Customer Toy World. Other payroll distribution was for selling and administrative. Out of the purchases, 80% were requisitioned: half went to Job 11, $55,000 to indirect materials and the balance to Job 12. Other factory overhead incurred amounted to $1,350,000. Applied overhead is 40% of direct labor. Job 11 was finished. Compute for the work in process charged to the jobs. Compute for the cost of the job charged out of work in process. Compute for the over or under applied factory overhead and make the entry.
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.
Toys R Us manufactures customized dolls. The following are the transactions for the month of May:
- Purchased $10,000,000 of raw materials on account.
- Paid for payroll P12,000,000: indirect labor $200,000 and direct labor $5,000,000 60% of which went to Job 11 Customer Toy Kingdom and the balance to Job 12 Customer Toy World. Other payroll distribution was for selling and administrative.
- Out of the purchases, 80% were requisitioned: half went to Job 11, $55,000 to indirect materials and the balance to Job 12.
- Other factory
overhead incurred amounted to $1,350,000. - Applied overhead is 40% of direct labor.
- Job 11 was finished.
- Compute for the work in process charged to the jobs.
- Compute for the cost of the job charged out of work in process.
- Compute for the over or under applied factory overhead and make the entry.
Step by step
Solved in 2 steps with 5 images
