Work in Process Finished Goods Bal. 17,000 Complete 245,000 40,000 Sold Bal. 210,000 DL 80,000 Complete 245,000 он 140,000 Bal. 75,000 DM 40,000 Bal. 32,000 Overhead Cost of Goods Sold 138,500 140,000 210,000 Bal. 1,500
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.
Barrymore Costume Company, located in New York City, sews costumes for plays and musicals. Barrymore considers itself primarily a service firm, as it never produces costumes without a preexisting order and only purchases materials to the specifications of the particular job. Any
finished goods ending inventory is temporary and is zeroed out as soon as the show producer
pays for the order. Overhead is applied on the basis of direct labor cost. During the first quarter
of the year, the following activity took place in each of the accounts listed:
Job 32 was the only job in process at the end of the first quarter. A total of 1,000 direct labor
hours at $10 per hour were charged to Job 32.
Required:
1. Assuming that overhead is applied on the basis of direct labor cost, what was the overhead
rate used during the first quarter of the year?
2. What was the applied overhead for the first quarter? The actual overhead? The under- or
overapplied overhead?
3. What was the cost of goods manufactured for the quarter?
4. Assume that the overhead variance is closed to the cost of goods sold account. Prepare the
journal entry to close out the overhead control account. What is the adjusted balance in
Cost of Goods Sold?
5. For Job 32, identify the costs incurred for direct materials, direct labor, and overhead.
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