X Company manufactures cakes in two departments: Mixing and Packaging. The company uses a process cost accounting system. All materials are entered at the beginning of each process. During April 2020, the following transactions were completed: Assigned raw materials of $70,000 and $30,000 to Work in Process Mixing and Packaging respectively. Factory labor costs of $40,000 and $20,000 were assigned to Work in Process Mixing and Packaging respectively. The company applied manufacturing overhead on the basis of $16 per machine hour. Machine hours used were 3,000 in Mixing and 1,000 in Packaging. During April, the company transferred units costing $150,000 from Mixing to Packaging. In addition, it transferred units costing S194,000 from Packaging to Finished Goods. Based on the above, the entry prepared to assign raw materials to work in processes consisted of: * A Debit to WIP Mixing $70,000, a Debit to WIP Packaging $30,000, and a Credit to Accounts Payable $100,000 A Debit to WIP Mixing $70,000, a credit to O WIP Packaging $30,000, and a Credit to Raw Material Inventory $40,000 A Debit to WIP Mixing $70,000, a Debit to O WIP Packaging $30,000, and a Credit to Raw Material Inventory $100,000 O None of the above
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.
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