Toys World started and finished job number A26, a batch of 1000 cuddly koalas, during March 2020. The job required $4850 of direct material and 32 hours of direct labour at $20 per hour. The predetermined overhead rate is $10.50 per direct labour hour. On 31st March, 900 of the cuddly koalas were shipped to a local toy shop. Required: a) Prepare journal entries to record the incurrence of production costs, completion of job number A26 and the shipment of 900 cuddly koalas to local toy shop. b) c) Calculate the cost per cuddly koala for job number A26. How might the managers at Toys World use this information?
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 World started and finished job number A26, a batch of 1000 cuddly koalas, during March
2020. The job required $4850 of direct material and 32 hours of direct labour at $20 per hour.
The predetermined overhead rate is $10.50 per direct labour hour. On 31st March, 900 of the
cuddly koalas were shipped to a local toy shop.
Required:
a) Prepare
job number A26 and the shipment of 900 cuddly koalas to local toy shop.
b)
c)
Calculate the cost per cuddly koala for job number A26.
How might the managers at Toys World use this information?
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