Lorrimer Company has a job-order cost system. The following debits (credits) appeared in theWork-in-Process account for the month of June. June 1, balance $12,000June 30, direct materials 50,000 During the month of June, direct labor totaled $30,000 and $24,000 of overhead was applied toproduction. Finished Goods was debited $100,000 during June.Lorrimer Company applies overhead at a predetermined rate of 80% of direct labor cost. Job number 83, the only job still in process at the end of June, has been charged with manufacturingoverhead of $3,400. What was the amount of direct materials charged to Job number 83?a. $3,400b. $4,250c. $8,350d. $7,580
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.
Lorrimer Company has a
Work-in-Process account for the month of June.
June 1, balance $12,000
June 30, direct materials 50,000
During the month of June, direct labor totaled $30,000 and $24,000 of overhead was applied to
production. Finished Goods was debited $100,000 during June.
Lorrimer Company applies overhead at a predetermined rate of 80% of direct labor cost. Job number 83, the only job still in process at the end of June, has been charged with manufacturing
overhead of $3,400. What was the amount of direct materials charged to Job number 83?
a. $3,400
b. $4,250
c. $8,350
d. $7,580
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