Haughton Company uses a job costing system for its production costs and a predetermined factory overhead rate based on direct labor costs to apply factory overhead to all jobs. During the month of July, the firm processed three jobs: X13, X14, and X15, of which X13 was started in June. July 1 July 31 Inventories Direct Materials $ 36,500 ? Work-in-Process 41,000 ? Finished Goods 0 0 Cost of Goods Sold $ ? Direct materials purchased in July 55,000 Materials issued to production:
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.
Haughton Company uses a
| July 1 | July 31 | ||||||
| Inventories | |||||||
| Direct Materials | $ | 36,500 | ? | ||||
| Work-in-Process | 41,000 | ? | |||||
| Finished Goods | 0 | 0 | |||||
| Cost of Goods Sold | $ | ? | |||||
| Direct materials purchased in July | 55,000 | ||||||
| Materials issued to production: | |||||||
| X13 | 16,380 | ||||||
| X14 | 24,220 | ||||||
| X15 | 14,000 | ||||||
| Factory labor hours used ($30/hour): | |||||||
| X13 | 3,500 | ||||||
| X14 | 2,800 | ||||||
| X15 | 1,600 | ||||||
| Indirect labor | 6,900 | ||||||
| Other factory overhead costs incurred: | |||||||
| Rent | $ | 131,500 | |||||
| Utilities | 180,600 | ||||||
| Repairs and maintenance | 188,500 | ||||||
| 131,100 | |||||||
| Other | 56,000 | ||||||
As of July 31, Job X13 was sold and Jobs X14 and X15 were still in process.
Total factory overhead applied in July was $900,600.
Required:
1. Compute the predetermined factory overhead rate.
2. Compute the amount of the Direct Materials account at the end of July.
3. Compute the actual
4. Compute the ending balance of the Work-in-Process Inventory account for July.
5. Prepare the Statement of Cost of Goods Manufactured for July.
6. Compute the amount of overapplied or underapplied overhead.
7. What is the cost per unit of Job X13 if it has a total of 100 units?
8. Prepare the Statement of Cost of Goods Sold for July.
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