Peterson Corporation Company uses a job costing system and had the following data available for the current period. (i) Purchased materials on account $70,000 (ii) Materials requisitioned ( includes $6,500 of indirect material) $54,500 (iii) Manufacturing wages incurred $75,000 (iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labour (v) Depreciation of factory equipment $13,500 (vi) Other manufacturing overhead incurred $45,900 (vii) Manufacturing overhead applied (as a % of direct labour cost) 130% (viii) Cost of goods completed $165,000 (ix) Cost of goods sold (on account) at a mark-up of 45% $130,000 (a) State the journal entries necessary to record the above transactions. (b)As your final journal entry, dispose of any overhead variance as a direct write-off to COGS (c)Determine the gross profit earned for the period.
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.
Peterson Corporation Company uses a
for the current period.
(i) Purchased materials on account $70,000
(ii) Materials requisitioned ( includes $6,500 of indirect material) $54,500
(iii) Manufacturing wages incurred $75,000
(iv) Assigned manufacturing wages, 85% direct labour, 15% indirect labour
(v)
(vi) Other manufacturing overhead incurred $45,900
(vii) Manufacturing overhead applied (as a % of direct labour cost) 130%
(viii) Cost of goods completed $165,000
(ix) Cost of goods sold (on account) at a mark-up of 45% $130,000
(a) State the journal entries necessary to record the above transactions.
(b)As your final
(c)Determine the gross profit earned for the period.
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