Waterways Problem 02 a-c (Part Level Submission) Waterways has two major public-park projects to provide with comprehensive irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres of landscaped terrain, which will require special-order, sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December. Raw materials were requisitioned from the company's inventory on December 2 for $5,067; on December 8 for $1,062; and on December 14 for $3,471. In each instance, two-thirds (2/3) of these materials were for J57 and the rest for K52. Six time tickets were turned in for these two projects for a total amount of 18 hours of work. All the workers were paid $18 per hour. The time tickets were dated December 3, December 9, and December 15. On each of those days, 6 labor hours were spent on these jobs, two-thirds (2/3) for J57 and the rest for K52. The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,106 hours, and the anticipated overhead costs are $842,400 for the year. The machines were used by workers on projects K52 and J57 on December 3, 9, and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours were used for project J57 (2.5 the first day and 3 each of the other days). Both of these special orders were completed on December 15, producing 200 sprinkler heads for J57 and 100 sprinkler heads for K52.
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.
WORKING NOTE
RAW MATERIAL USED | |
ON DEC 2 | 5067 |
ON DEC 8 | 1062 |
ON DEC 14 | 3471 |
RAW MATERIAL USED TOTAL | 9600 |
MATERIAL USED FOR J57 ( 9600 X 2/3 ) | 6400 |
MATERIAL USED FOR K52 ( 9600 X 1/3 ) | 3200 |
DIRECT LABOUR COST | |
TOTAL TIME SPENT FOR TWO PROJECTS (HOURS) | 18 |
LABOUR COST PER HOUR | 18 |
DIRECT LABOUR COST ( 18 X 18 ) | 324 |
DIRECT LABOUR COST USED FOR J57 (324 X 2/3) | 216 |
DIRECT LABOUR COST USED FOR K52 (324 X 1/3) | 108 |
OVERHEAD RATE | |
BUDGETED MACHINE HOURS | 2106 |
BUDGETED MANUFACTURING OVERHEAD | 842,400 |
OVERHEAD RATE ( 842,400 / 2106 ) | 400 PER MACHINE HOUR |
MANUFACTURING OVERHEAD FOR JOBS | |
J57 ( 6 X 400 ) | 2,400 |
K52 ( 8.5 X 400 ) | 3,400 |
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