What is the predetermined overhead rate based on direct labor cost? What is the total cost for each job as of April 30? What is the ending balance of Work in process as of April 30?
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.
On April 1, Peter Senen Company had the following balances in the inventory accounts:
Materials Inventory P12,450
Work in process Inventory 22,605
Finished Goods Inventory 4,600
Work in process inventory is made up of three jobs with the following costs:
Job 114 Job 115 Job 116
Direct Materials P3,650 P1,900 P3,650
Direct labor 1,800 1,560 4.300
Applied
During April, Peter Senen experienced the transactions listed below:
- Materials purchased on account, P26,000
- Materials requisitioned: Job 114, P16,500; Job 115, P12,200 and Job 116, P5,000
- Direct labor hours worked: Job 114, 350 hours at P12 per hour; Job 115, 280 hours at P15 per hour and Job 116, 150 hours at P20 per hour.
- Overhead is applied on the basis of direct labor cost
- Actual overhead was P8,718
- Job 115 was completed and transferred to the finished goods warehouse.
- Job 115 was shipped, and the customer was billed for 120% of the cost.
- What is the predetermined overhead rate based on direct labor cost?
- What is the total cost for each job as of April 30?
- What is the ending balance of Work in process as of April 30?
- What is the cost of goods sold for April?
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