Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $234,840 and total machine hours at 61,800. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 Total Direct materials used $ 11,900 $ 7,900 $ 5,200 $ 25,000 Direct labor $ 17,300 $ 5,000 $ 5,400 $ 27,700 Machine hours 1,600 hours 2,500 hours 800 hours 4,900 hours Job 101 was completed and sold for $50,800. Job 102 was completed but not sold. Job 103 is still in process. Actual overhead costs recorded during the first month of operations totaled $14,020. Required: 1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101.
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.
Tyler Tooling Company uses a
Job 101 Job 102 Job 103 Total
Direct materials used $ 11,900 $ 7,900 $ 5,200 $ 25,000
Direct labor $ 17,300 $ 5,000 $ 5,400 $ 27,700
Machine hours 1,600 hours 2,500 hours 800 hours 4,900 hours
Job 101 was completed and sold for $50,800.
Job 102 was completed but not sold.
Job 103 is still in process.
Actual overhead costs recorded during the first month of operations totaled $14,020.
Required:
1. Prepare a
2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101.
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