XYz/Company manufactures special purpose machines to order. Because the products are tailored for the customers' preference, completed units are automatically sold to gain 20% profit on billed price. On 1/1/2017 there were two jobs in process, 405 and 406. The following costs were applied to them in 2016: Job 405 P 5,000 Job 406 P 8,000 Direct material Direct labor 4,000 4,400 3,000 Overhead 3,300 P14,300 Total P13,400 During January of 2017, the following transactions took place: • Raw material costing P40,000 was purchased on account. • Jobs #407, 408, and 409 were started and the following costs were applied to them: Job 407 Job 408 Job 409 P 7,000 4,000 Direct materials P3,000 5,000 P10,000 6,000 Direct labor • Job P405 and Job #406 were completed after incurring additional direct labor costs of P2,000 and P4,000, respectively. Job 408 is also completed on January. • Wages paid to production employees during January totaled P25,000. • Depreciation of factory equipment for the month of January totaled P10,000. • Utilities bills (where 30% of the utilities are related to office, while the remaining can be attributed to the factory) in the amount of P10,000 were paid for December 2016 operations. • Supplies costing P2,000 were used. Only 40% is used by the factory, while the 60% is used for promotional activities (flyers, etc.). Office rent totaling P5,000 were billed for January operations. Miscellaneous overhead expenses totaled P13,300 for January.
XYz/Company manufactures special purpose machines to order. Because the products are tailored for the customers' preference, completed units are automatically sold to gain 20% profit on billed price. On 1/1/2017 there were two jobs in process, 405 and 406. The following costs were applied to them in 2016: Job 405 P 5,000 Job 406 P 8,000 Direct material Direct labor 4,000 4,400 3,000 Overhead 3,300 P14,300 Total P13,400 During January of 2017, the following transactions took place: • Raw material costing P40,000 was purchased on account. • Jobs #407, 408, and 409 were started and the following costs were applied to them: Job 407 Job 408 Job 409 P 7,000 4,000 Direct materials P3,000 5,000 P10,000 6,000 Direct labor • Job P405 and Job #406 were completed after incurring additional direct labor costs of P2,000 and P4,000, respectively. Job 408 is also completed on January. • Wages paid to production employees during January totaled P25,000. • Depreciation of factory equipment for the month of January totaled P10,000. • Utilities bills (where 30% of the utilities are related to office, while the remaining can be attributed to the factory) in the amount of P10,000 were paid for December 2016 operations. • Supplies costing P2,000 were used. Only 40% is used by the factory, while the 60% is used for promotional activities (flyers, etc.). Office rent totaling P5,000 were billed for January operations. Miscellaneous overhead expenses totaled P13,300 for January.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:XYZ Company manufactures special purpose machines to order. Because the products are tailored for
the customers' preference, completed units are automatically sold to gain 20% profit on billed price. On
1/1/2017 there were two jobs in process, 405 and 406. The following costs were applied to them in
2016:
Job 405
P 5,000
Job 406
P 8,000
Direct material
Direct labor
4,000
3,000
Overhead
4,400
P13,400
3,300
Total
P14.300
During January of 2017, the following transactions took place:
Raw material costing P40,000 was purchased on account.
Jobs #407, 408, and 409 were started and the following costs were applied to them:
Job 407
Job 408
Job 409
P 7,000
Direct materials
Direct labor
P3,000
P10,000
5,000
6,000
4,000
Job P405 and Job #406 were completed after incurring additional direct labor costs of P2,000 and
P4,000, respectively. Job 408 is also completed on January.
• Wages paid to production employees during January totaled P25,000.
• Depreciation of factory equipment for the month of January totaled P10,000.
• Utilities bills (where 30% of the utilities are related to office, while the remaining can be attributed
to the factory) in the amount of P10,000 were paid for December 2016 operations.
• Supplies costing P2,000 were used. Only 40% is used by the factory, while the 60% is used for
promotional activities (flyers, etc.). Office rent totaling P5,000 were billed for January operations.
• Miscellaneous overhead expenses totaled P13,300 for January.
Any over- or underapplied overhead is considered material for the company.
REQUIRED:
1. How much is the total manufacturing costs for January?
2. Give the entry to record the closing of over-underapplied overhead for the period.
3. How much is the adjusted ending Work-in-Process Inventory?
4. How much is the Net income for January?
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