ntegrity Company employs a standard absorption system for product costing. The standard cost of its product is as follows: Direct materials P 14.50 Direct labor (2 direct labor hours at P8.00) 16.00 Factory overhead ( 2 direct labor hours at P11) 22.50 Total standard cost P 52.50 The manufacturing overhead rate is based upon a normal activity level of 600,000 direct labor hours. Integrity planned to produce 25,000 units each month during the year. The budgeted annual overhead is: Variable– P3,600,000; Fixed – P3,000,000. During November, Integrity produced 26,000 units. Integrity used 53,500 direct labor hours in November at a cost of P433,350. Actual manufacturing overhead for the month was P245,000 fixed and P325,000 variable. How much is the total amount debited to Work in Process Inventory for materials used?
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.
Integrity Company employs a standard absorption system for product costing. The
Direct materials P 14.50
Direct labor (2 direct labor hours at P8.00) 16.00
Factory overhead ( 2 direct labor hours at P11) 22.50
Total standard cost P 52.50
The manufacturing overhead rate is based upon a normal activity level of 600,000 direct labor hours. Integrity planned to produce 25,000 units each month during the year. The budgeted annual overhead is: Variable– P3,600,000; Fixed – P3,000,000. During November, Integrity produced 26,000 units. Integrity used 53,500 direct labor hours in November at a cost of P433,350. Actual manufacturing overhead for the month was P245,000 fixed and P325,000 variable.
How much is the total amount debited to Work in Process Inventory for materials used?
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