The Polaris Company uses a job-order costing system. The following data relate to October, the first monthof the company’s fiscal year.a. Raw materials purchased on account, $210,000.b. Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirectmaterials).c. Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.d. Depreciation recorded on factory equipment, $40,000.e. Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable).f. The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour.A total of 30,000 machine-hours were recorded for October.g. Production orders costing $520,000 according to their job cost sheets were completed during Octoberand transferred to Finished Goods.h. Production orders that had cost $480,000 to complete according to their job cost sheets were shippedto customers during the month. These goods were sold on account at 25% above cost.Required:1. Prepare journal entries to record the information given above.2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant informationabove to each account. Compute the ending balance in each account, assuming that Work in Processhas a beginning balance of $42,000.
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.
The Polaris Company uses a job-order costing system. The following data relate to October, the first month
of the company’s fiscal year.
a. Raw materials purchased on account, $210,000.
b. Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect
materials).
c. Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.
d. Depreciation recorded on factory equipment, $40,000.
e. Other manufacturing
f. The company applies
A total of 30,000 machine-hours were recorded for October.
g. Production orders costing $520,000 according to their
and transferred to Finished Goods.
h. Production orders that had cost $480,000 to complete according to their job cost sheets were shipped
to customers during the month. These goods were sold on account at 25% above cost.
Required:
1. Prepare
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information
above to each account. Compute the ending balance in each account, assuming that Work in Process
has a beginning balance of $42,000.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
