Walton Manufacturing started in Year 2 with the following account balances. Cash $ 5,800 Common stock 4,630 Retained earnings 5,800 Raw materials inventory 1,300 Work in process inventory 810 Finished goods inventory (420 units @ $6.00 each) 2,520 Transactions during Year 2 Purchased $2,950 of raw materials with cash. Transferred $3,780 of raw materials to the production department. Incurred and paid cash for 200 hours of direct labor @ $15.50 per hour. Applied overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.40 per direct labor hour. Incurred actual overhead costs of $3,400 cash. Completed work on 1,300 units for $5.50 per unit. Paid $1,130 in selling and administrative expenses in cash. Sold 1,300 units for $9,800 cash revenue (assume FIFO cost flow). Walton charges overapplied or underapplied overhead directly to Cost of Goods Sold. Required Record the preceding events in a horizontal statements model. The beginning balances are shown as an example. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 2
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.
Walton Manufacturing started in Year 2 with the following account balances.
| Cash | $ | 5,800 | |
| Common stock | 4,630 | ||
| 5,800 | |||
| Raw materials inventory | 1,300 | ||
| Work in process inventory | 810 | ||
| Finished goods inventory (420 units @ $6.00 each) | 2,520 | ||
Transactions during Year 2
-
Purchased $2,950 of raw materials with cash.
-
Transferred $3,780 of raw materials to the production department.
-
Incurred and paid cash for 200 hours of direct labor @ $15.50 per hour.
-
Applied
overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.40 per direct labor hour. -
Incurred actual overhead costs of $3,400 cash.
-
Completed work on 1,300 units for $5.50 per unit.
-
Paid $1,130 in selling and administrative expenses in cash.
-
Sold 1,300 units for $9,800 cash revenue (assume FIFO cost flow).
-
Walton charges overapplied or underapplied overhead directly to Cost of Goods Sold.
Required
-
Record the preceding events in a horizontal statements model. The beginning balances are shown as an example.
-
Prepare a schedule of cost of goods manufactured and sold, an income statement, and a
balance sheet for Year 2
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