Premium Company is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: Beginning Balance Ending Balance Raw materials ........ P14,000 22,000 Work in process ...... 27,000 9,000 Finished goods ....... 62,000 77,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur P231,000 in manufacturing overhead cost. The following transactions were recorded for the year: • Raw materials were purchased,
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.
Premium Company is a manufacturing firm that uses
were as follows at the beginning and end of the year:
Beginning Balance Ending Balance
Raw materials ........ P14,000 22,000
Work in process ...... 27,000 9,000
Finished goods ....... 62,000 77,000
The company applies
the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur
P231,000 in
• Raw materials were purchased, P315,000.
• Raw materials were requisitioned for used in production,P307,000 (P281,000 direct and P26,000 indirect).
• The following employee costs were incurred: direct labor,P377,000; indirect labor,96,000; and administrative
salaries, P172,000.Selling costs, P147,000.
• Factory utility costs, P10,000.
•
related to selling and Administrative activities.
• Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machinehours.
• Sales for the year totalled P1,253,000
What is the net income for the year?
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