XYZ Incorporation provides the following financial data for the month of July 2020: Beginning Inventories 'Rs.' Direct Material 12,000 WIP - Finished Goods - 1. Purchased material on accounts for Rs. 200,000 2. Defective material returned to supplier worth Rs. 5,000 3. Material and labor issued to job during the month Direct material Direct Labor Job # 101 40,000 65,000 Job # 102 50,000 80,000 Job # 103 30,000 50,000 Job # 104 25,000 40,000 Indirect 5,000 15,000 4. FOH rate is 120% of direct labor cost 5. Actual FOH cost incurred on account Rs. 250,000 Required Prepare journal entries to record the preceding transactions.
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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XYZ Incorporation provides the following financial data for the month of July 2020: |
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Beginning Inventories 'Rs.' |
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Direct Material |
12,000 |
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WIP |
- |
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Finished Goods |
- |
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1. Purchased material on accounts for Rs. 200,000 |
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2. Defective material returned to supplier worth Rs. 5,000 |
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3. Material and labor issued to job during the month
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Direct material |
Direct Labor |
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Job # 101 |
40,000 |
65,000 |
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Job # 102 |
50,000 |
80,000 |
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Job # 103 |
30,000 |
50,000 |
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Job # 104 |
25,000 |
40,000 |
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Indirect |
5,000 |
15,000 |
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4. FOH rate is 120% of direct labor cost |
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5. Actual FOH cost incurred on account Rs. 250,000 |
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Required |
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Prepare |
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