Latourneau Company had the following account balances as of August 1, 2010: Raw Material (direct and indirect) Inventory $25,300 Work in Process Inventory 10,000 Finished Goods Inventory 20,000 During August, the company incurred the following factory costs: 1. Purchased $174,000 of raw material on account. 2. Issued $190,000 of raw material to production, of which $134,000 was for direct materials. 3. Accrued $98,000 in factory payroll costs; $62,000 was for direct labor and the rest was for supervisors’ salaries. 4. Accrued $8,000 of utility costs; of this amount, $1,600 was fixed. 5. Accrued $5,000 of property taxes on the factory. 6. Recorded the expiration of $2,600 of prepaid insurance on factory equipment. 7. Recorded $50,000 of straight-line depreciation on factory equipment. 8. Applied actual overhead to Work in Process Inventory. 9. Transferred goods costing $330,000 to Finished Goods Inventory. 10. Recorded total sales of $750,000; of these, $550,000 were on account. 11. Recorded cost of goods sold of $330,000. 12. Recorded selling and administrative costs of $350,000 (credit “Various accounts”). Required: b. Post transactions to T-accounts for Raw Material Inventory, Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold.
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.
Latourneau Company had the following account balances as of August 1, 2010:
Raw Material (direct and indirect) Inventory $25,300
Work in Process Inventory 10,000
Finished Goods Inventory 20,000
During August, the company incurred the following
1. Purchased $174,000 of raw material on account.
2. Issued $190,000 of raw material to production, of which $134,000 was for direct materials.
3. Accrued $98,000 in factory payroll costs; $62,000 was for direct labor and the rest was
for supervisors’ salaries.
4. Accrued $8,000 of utility costs; of this amount, $1,600 was fixed.
5. Accrued $5,000 of property taxes on the factory.
6. Recorded the expiration of $2,600 of prepaid insurance on factory equipment.
7. Recorded $50,000 of straight-line
8. Applied actual overhead to Work in Process Inventory.
9. Transferred goods costing $330,000 to Finished Goods Inventory.
10. Recorded total sales of $750,000; of these, $550,000 were on account.
11. Recorded cost of goods sold of $330,000.
12. Recorded selling and administrative costs of $350,000 (credit “Various accounts”).
Required:
b.
Finished Goods Inventory, and Cost of Goods Sold.
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