Yurman Inc. uses a job-order costing system. During the month of May, the following transactions occurred: May 1 Purchased materials on account for $29,730. 3 Requisitioned materials totaling $24,470 for use in production. Of the total, $9,220 was for Job 58, $8,850 for Job 59, and the remainder for Job 60. 31 Incurred direct labor for the month of $30,600, with an average wage of $17 per hour. Job 58 used 780 hours; Job 59, 620 hours; and Job 60, 400 hours. 31 Incurred and paid actual overhead of $17,930 (credit Various Payables). 31 Charged overhead to production at the rate of $4.70 per direct labor hour. 31 Completed and transferred Jobs 58 and 59 to Finished Goods. 31 Sold Job 57 (see beginning balance of Finished Goods) and Job 58 to their respective clients on account for a price of cost plus 40%. Beginning balances as of May 1 were: Materials $2,330 Work in Process 0 Finished Goods (Job 57) 25,590 Required: 1. Prepare journal entries for transactions from May 1 through 31. 2. Prepare brief job-order cost sheets for Jobs 58, 59, and 60. 3. Calculate the ending balance of Raw Materials. 4. Calculate the ending balance of Work in Process. 5. Calculate the ending balance of Finished Goods.
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.
| May | 1 | Purchased materials on account for $29,730. |
| 3 | Requisitioned materials totaling $24,470 for use in production. Of the total, $9,220 was for Job 58, $8,850 for Job 59, and the remainder for Job 60. | |
| 31 | Incurred direct labor for the month of $30,600, with an average wage of $17 per hour. Job 58 used 780 hours; Job 59, 620 hours; and Job 60, 400 hours. | |
| 31 | Incurred and paid actual |
|
| 31 | Charged overhead to production at the rate of $4.70 per direct labor hour. | |
| 31 | Completed and transferred Jobs 58 and 59 to Finished Goods. | |
| 31 | Sold Job 57 (see beginning balance of Finished Goods) and Job 58 to their respective clients on account for a price of cost plus 40%. |
| Materials | $2,330 |
| Work in Process | 0 |
| Finished Goods (Job 57) | 25,590 |
| Required: | |
| 1. | Prepare |
| 2. | Prepare brief |
| 3. | Calculate the ending balance of Raw Materials. |
| 4. | Calculate the ending balance of Work in Process. |
| 5. | Calculate the ending balance of Finished Goods. |
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