Reign Inc. produces special machines made to customer specifications. The following data pertain to Job 109 composed of 20 drilling units with a total contract price of P 25,000. Week ending April 8 Week ending April 15 Materials Department 1 P 2,400 P 1,300 Direct labor rate – Dept 1 P 8.20/ hour P 8.20 / hour Labor hours used – Dept 1 300 200 Direct labor rate – Dept 2 P 8.00 / hour P 8.00 / hour Labor hours used – Dept 2 150 70 Machine hours used – Dept 2 200 120 Applied factory overhead Department 1 P 4.00 per labor hour Department 2 P 1.00 per machine hour Marketing and administrative costs are charged to each order at a rate of 25% of the cost to manufacture. Requirements: Compute the total direct materials cost of Job 109. Compute the total direct labor cost of the Job 109. Compute the total factory overhead applied to Job 109.
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.
Reign Inc. produces special machines made to customer specifications. The following data pertain to Job 109 composed of 20 drilling units with a total contract price of P 25,000.
|
|
Week ending April 8 |
Week ending April 15 |
|
Materials Department 1 |
P 2,400 |
P 1,300 |
|
Direct labor rate – Dept 1 |
P 8.20/ hour |
P 8.20 / hour |
|
Labor hours used – Dept 1 |
300 |
200 |
|
Direct labor rate – Dept 2 |
P 8.00 / hour |
P 8.00 / hour |
|
Labor hours used – Dept 2 |
150 |
70 |
|
Machine hours used – Dept 2 |
200 |
120 |
Applied factory overhead
Department 1 P 4.00 per labor hour
Department 2 P 1.00 per machine hour
Marketing and administrative costs are charged to each order at a rate of 25% of the cost to manufacture.
Requirements:
- Compute the total direct materials cost of Job 109.
- Compute the total direct labor cost of the Job 109.
- Compute the total factory overhead applied to Job 109.
- Compute the total gross profit of the order.
- Compute the net income of the order.
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