Water Wonders, Inc., makers of custom-made Jet Skis, the company has been in operations since May 2, 1987. Due to increase acceptability the company has also started to take customized orders. The company has completed Job 500 on March 31, and there were no jobs in process in the plant. Prior to April 1, the predetermined overhead application rate for April was computed from the following data, based on an estimate of 40,000 direct labor hours: Estimated variable factory overhead $100,000 Estimated fixed factory overhead $200,000 Total estimated factory overhead $300,000 The factory has one production department, and the direct labor hour method is used to apply factory overhead. Three jobs are started during the month, and postings are made daily to the job cost sheets from the materials requisitions and labor-time records. The following schedule shows the jobs and the amounts posted to the job cost sheets: Job Date Started Direct Materials Direct Labor Direct Labor Hours 401 April 2 $100,000 $120,000 12,000 402 April 12 200,000 250,000 18,000 403 April 15 80,000 75,000 8,000 The actual factory overhead expenses are $325,000. On April 11, Job 401 was completed and delivered to the customer at a markup of 25% on manufacturing cost. On April 24, Job 402 was completed and transferred to Finished Goods. On April 30, Job 403 was still in process. Required: a) Calculate the cost for Jobs 401, 402, and 403, including factory overhead applied when the job was completed or at the end of the month for partially completed jobs.
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.
Water Wonders, Inc., makers of custom-made Jet Skis, the company has been in operations since May
2, 1987. Due to increase acceptability the company has also started to take customized orders. The
company has completed Job 500 on March 31, and there were no jobs in process in the plant. Prior to
April 1, the predetermined overhead application rate for April was computed from the following data,
based on an estimate of 40,000 direct labor hours:
Estimated variable factory overhead $100,000
Estimated fixed factory overhead $200,000
Total estimated factory overhead $300,000
The factory has one production department, and the direct labor hour method is used to apply factory
overhead. Three jobs are started during the month, and postings are made daily to the
from the materials requisitions and labor-time records. The following schedule shows the jobs and the
amounts posted to the job cost sheets:
Job Date Started Direct Materials Direct Labor Direct Labor Hours
401 April 2 $100,000 $120,000 12,000
402 April 12 200,000 250,000 18,000
403 April 15 80,000 75,000 8,000
The actual factory overhead expenses are $325,000. On April 11, Job 401 was completed and delivered
to the customer at a markup of 25% on
transferred to Finished Goods. On April 30, Job 403 was still in process.
Required:
a) Calculate the cost for Jobs 401, 402, and 403, including factory overhead applied when the job was
completed or at the end of the month for partially completed jobs.
b) Prepare
a. Transferring the cost of the completed jobs to Finished Goods.
b. Recording the cost of the sale and the sale of Job 401
c. Analyze the current situation of the company?
Step by step
Solved in 4 steps
