A manufacturer’s job cost sheet reports direct materials of $1,200 and direct labor of $250 for printing 200 T-shirts for a bikers’ reunion. Estimated overhead is computed as 140% of direct labor costs. 1. What is the estimated overhead cost for this job? 2. What is the total cost per T-shirt for this job? 3. What journal entry does the manufacturer make upon completion of this job to transfer costs from work in process to 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.
A
200 T-shirts for a bikers’ reunion. Estimated overhead is computed as 140% of direct labor costs.
1. What is the estimated overhead cost for this job?
2. What is the total cost per T-shirt for this job?
3. What
work in process to finished goods?
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