[The following information applies to the questions displayed below.] Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories: Beginning Inventory Ending Inventory Raw materials inventory $ 154,000 $ 261,000 Work in process inventory—Weaving 470,000 340,000 Work in process inventory—Sewing 750,000 840,000 Finished goods inventory 1,356,000 1,286,000 The following additional information describes the company’s manufacturing activities for June: Raw materials purchases (on credit) $ 675,000 Factory payroll cost (paid in cash) 3,325,000 Other factory overhead cost (Other Accounts credited) 176,000 Materials used Direct—Weaving $ 298,000 Direct—Sewing 78,000 Indirect 124,000 Labor used Direct—Weaving $ 1,250,000 Direct—Sewing 500,000 Indirect 1,575,000 Overhead rates as a percent of direct labor Weaving 85 % Sewing 155 % Sales (on credit) $ 5,050,000
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.
Use the following information for the Exercises below.
[The following information applies to the questions displayed below.]
Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories:
| Beginning Inventory | Ending Inventory | |||||
| Raw materials inventory | $ | 154,000 | $ | 261,000 | ||
| Work in process inventory—Weaving | 470,000 | 340,000 | ||||
| Work in process inventory—Sewing | 750,000 | 840,000 | ||||
| Finished goods inventory | 1,356,000 | 1,286,000 | ||||
The following additional information describes the company’s manufacturing activities for June:
| Raw materials purchases (on credit) | $ | 675,000 | |
| 3,325,000 | |||
| Other factory overhead cost (Other Accounts credited) | 176,000 | ||
| Materials used | |||
| Direct—Weaving | $ | 298,000 | |
| Direct—Sewing | 78,000 | ||
| Indirect | 124,000 | ||
| Labor used | |||
| Direct—Weaving | $ | 1,250,000 | |
| Direct—Sewing | 500,000 | ||
| Indirect | 1,575,000 | ||
| Overhead rates as a percent of direct labor | |||
| Weaving | 85 | % | |
| Sewing | 155 | % | |
| Sales (on credit) | $ | 5,050,000 | |
Exercise 16-14 Production cost flow and measurement; journal entries LO P4
1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold.
2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, (c) sale of finished goods, and (d) cost of goods sold.
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