Nasir Engineering Works produces robotic arms according to customers' specifications. At November 1, 2015 these Jobs were in process. Job No. Material Cost (Rs.) Labor Cost (Rs.) Factory Overhead Job no material cost Rs labour cost Rs Factory overhead 201 A 3000 3000 70% direct labour 215 B 8000 7000 75% direct labour 230 C 5600 3800 70% direct labour Additional Costs to Complete the Products During November: Material Rs. 30,000 allocated as follows: • Job No. 201 A, 30%, • Job No. 215 B, 45% • Job No. 230 C, 25% Labour charges Rs. 5,000 per Job and factory overhead applied to all the jobs at 75% of direct Labour. All the jobs were completed and sold during November. Required: a) Prepare Journal Entry to record transfer of the jobs to the finished goods account. b) Calculate cost of goods manufactured 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.
Nasir Engineering Works produces robotic arms according to customers' specifications. At November 1, 2015 these Jobs were in process.
Job No. Material Cost (Rs.) Labor Cost (Rs.) Factory Overhead
| Job no | material cost Rs | labour cost Rs | Factory overhead |
| 201 A | 3000 | 3000 | 70% direct labour |
| 215 B |
8000 |
7000 | 75% direct labour |
| 230 C | 5600 | 3800 | 70% direct labour |
Additional Costs to Complete the Products During November:
Material Rs. 30,000 allocated as follows:
• Job No. 201 A, 30%,
• Job No. 215 B, 45%
• Job No. 230 C, 25%
Labour charges Rs. 5,000 per Job and factory overhead applied to all the jobs at 75% of direct Labour. All the jobs were completed and sold during November.
Required:
a) Prepare
b) Calculate cost of goods
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