3.H2M manufacturing company uses job order costing system. The company uses machine hours toapply overhead cost to jobs. At the beginning of 2012, the company estimated that 150,000 machinehours would be worked and $900,000 overhead cost would be incurred during 2012.The balances of raw materials, work in process (WIP), and finished goods at the beginning of 2012were as follows: Raw materials: $40,000 Work in process: $30,000 Finished goods: $60,000H2M manufacturing company recorded the following transactions during 2012: a) Raw materials purchased on account, $820,000.b) Raw materials were requisitioned for use in production, $760,000 ($720,000 direct materials and $40,000 indirect materials).c) Direct labor, $150,000; indirect labor, $220,000; sales commission, $180,000; and administrative salaries, $400,000.d) Sales travel costs were $34,000.e) Utility costs incurred in the factory, $86,000.f) Advertising expenses were $360,000.g) Depreciation for the year was $700,000 ($560,000 relates to factory and $140,000 relates to selling and administrative activities).h) Insurance expired during the year, $20,000 ($14,000 relates to factory operations and $6,000 relates to selling and administrative activities). i) Fine manufacturing company worked 160,000 machine hours. Manufacturing overhead was appliedto production. j) Goods costing $1,800,000 were completed during the year.k) The goods costing $1,740,000 were sold to customers for $3,000,000. Required:1. Prepare journal entries, T-accounts and income statement from the above information.2. Prepare a journal entry to close the balance in manufacturing overhead account (over or under applied manufacturing overhead) to cost of goods sold. 4.2C Company uses job-order costing. It applies overhead cost to jobs on the basis of direct labor
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.
3.
H2M manufacturing company uses job order costing system. The company uses machine hours to
apply overhead
hours would be worked and $900,000 overhead cost would be incurred during 2012.
The balances of raw materials, work in process (WIP), and finished goods at the beginning of 2012
were as follows:
Raw materials: $40,000
Work in process: $30,000
Finished goods: $60,000
H2M manufacturing company recorded the following transactions during 2012:
a) Raw materials purchased on account, $820,000.
b) Raw materials were requisitioned for use in production, $760,000 ($720,000 direct materials and
$40,000 indirect materials).
c) Direct labor, $150,000; indirect labor, $220,000; sales commission, $180,000; and administrative
salaries, $400,000.
d) Sales travel costs were $34,000.
e) Utility costs incurred in the factory, $86,000.
f) Advertising expenses were $360,000.
g)
and administrative activities).
h) Insurance expired during the year, $20,000 ($14,000 relates to factory operations and $6,000 relates
to selling and administrative activities).
i) Fine manufacturing company worked 160,000 machine hours. Manufacturing overhead was applied
to production.
j) Goods costing $1,800,000 were completed during the year.
k) The goods costing $1,740,000 were sold to customers for $3,000,000.
Required:
1. Prepare journal entries, T-accounts and income statement from the above information.
2. Prepare a
applied manufacturing overhead) to cost of goods sold.
4.
2C Company uses job-order costing. It applies overhead cost to jobs on the basis of direct labor
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