JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORYOVERHEADM. Evans & Sons manufactures parts for radios. For each job order, itmaintains ledger sheets on which it records direct labor, direct materials, and factoryoverhead applied. The factory overhead control account contains postings of actual overhead costs. At the end of the month, the under- or overapplied factory overhead is charged to the cost of goods sold account.Factory overhead is applied on the basis of direct labor hours. For Job Nos. 101, 102, 103, and 104, direct labor hours are 12,000, 10,000, 11,000, and 18,000, respectively. The overhead application rate is $1.20/direct labor hour.(a) Purchased raw materials on account, $50,000.(b) Issued direct materials:Job No. 101: $10,000Job No. 102: 8,000Job No. 103: 9,000Job No. 104: 15,000(c) Issued indirect materials to production, $8,000.(d) Incurred direct labor costs:Job No. 101: $22,000Job No. 102: 19,000Job No. 103: 20,500Job No. 104: 30,000(e) Charged indirect labor to production, $15,000.(f) Paid electricity bill, taxes, and repair fees for the factory and charged to production, $8,000.(g) Depreciation expense on factory equipment, $30,000.(h) Applied factory overhead to Job Nos. 101–104 using the predetermined factory overhead rate (see above).(i) Finished Job Nos. 101–103 and transferred to the finished goods inventory account as products N, O, and P.(j) Sold products N and O for $50,000 and $45,400, respectively.(k) Transferred under- or overapplied factory overhead balance to the cost of goods sold account.Required1. Prepare general journal entries to record transactions (a) through (k). Make compound entries for (b), (d), and (h), with separate debits for each job.2. Post the entries to the work in process and finished goods T accounts only and determine the ending balances in these accounts.3. Compute the balance in the job cost ledger and verify that this balance agrees with that in the work in process control account.
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.
OVERHEAD
M. Evans & Sons manufactures parts for radios. For each job order, it
maintains ledger sheets on which it records direct labor, direct materials, and factoryoverhead applied. The factory overhead control account contains postings of actual overhead costs. At the end of the month, the under- or overapplied factory overhead is charged to the cost of goods sold account.
Factory overhead is applied on the basis of direct labor hours. For Job Nos. 101, 102, 103, and 104, direct labor hours are 12,000, 10,000, 11,000, and 18,000, respectively. The overhead application rate is $1.20/direct labor hour.
(a) Purchased raw materials on account, $50,000.
(b) Issued direct materials:
Job No. 101: $10,000
Job No. 102: 8,000
Job No. 103: 9,000
Job No. 104: 15,000
(c) Issued indirect materials to production, $8,000.
(d) Incurred direct labor costs:
Job No. 101: $22,000
Job No. 102: 19,000
Job No. 103: 20,500
Job No. 104: 30,000
(e) Charged indirect labor to production, $15,000.
(f) Paid electricity bill, taxes, and repair fees for the factory and charged to production, $8,000.
(g)
(h) Applied factory overhead to Job Nos. 101–104 using the predetermined factory overhead rate (see above).
(i) Finished Job Nos. 101–103 and transferred to the finished goods inventory account as products N, O, and P.
(j) Sold products N and O for $50,000 and $45,400, respectively.
(k) Transferred under- or overapplied factory overhead balance to the cost of goods sold account.
Required
1. Prepare general
2.
3. Compute the balance in the job cost ledger and verify that this balance agrees with that in the work in process control account.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
