Shoostar Ltd is a video tech company that produces videos for companies’ marketing campaigns and video training content. All jobs are tailor-made to the clients’ requirements. The company uses a job costing system, and had 2 jobs in process at the start of the year: Job S1 ($66 000) and Job S3 ($55 000). The following information is available: (i) The company applies manufacturing overhead on the basis of video production hours. Budgeted overhead and video production activity for the year were anticipated to be $800 000 and 40 000 hours, respectively. (ii) The company worked on four jobs during the first quarter (i.e. from 1 July to 30 September). Direct materials used, direct labour incurred and video production hours were as shown in the following table: Job numbers Direct material Direct labour Video production hours S1 $ - $40 000 500 S2 50 500 23 000 1000 S3 - 65 000 1 500 S4 30 000 $40 000 2 000 (iii) Manufacturing overhead incurred during the first quarter was $385 000. (iv) Shoostar Ltd completed Job S1, and Job S3 during the first quarter. Job S1 was sold on credit, producing a profit of $60 000 for the company. Required: Calculate manufacturing overhead applied to production for the first quarter Determine the cost of jobs completed in the first quarter. Determine the cost of goods sold at the end of the first quarter Can a company use both job order costing and process costing? Why or why not
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.
Shoostar Ltd is a video tech company that produces videos for companies’ marketing campaigns and video training content. All jobs are tailor-made to the clients’ requirements. The company uses a
(i) The company applies manufacturing
(ii) The company worked on four jobs during the first quarter (i.e. from 1 July to 30 September). Direct materials used, direct labour incurred and video production hours were as shown in the following table:
|
Job numbers |
Direct material |
Direct labour |
Video production hours |
|
S1 |
$ - |
$40 000 |
500 |
|
S2 |
50 500 |
23 000 |
1000 |
|
S3 |
- |
65 000 |
1 500 |
|
S4 |
30 000 |
$40 000 |
2 000 |
(iii) Manufacturing overhead incurred during the first quarter was $385 000.
(iv) Shoostar Ltd completed Job S1, and Job S3 during the first quarter. Job S1 was sold on credit, producing a profit of $60 000 for the company.
Required:
Calculate manufacturing overhead applied to production for the first quarter
Determine the cost of jobs completed in the first quarter.
Determine the cost of goods sold at the end of the first quarter
Can a company use both job order costing and
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