A company follows process costing and manufactures a product in one process. The work-in-progress at the end of each month is valued according to FIFO method. At the beginning of the month of January, the inventory of work-in- progress showed the 400 units, 40% completed, valued at RO 8000. In the month of January 2600 units amounting to RO 68,500 were introduced into the process. Wages and overheads amounted to RO 79,200 and RO 21,120, respectively. Finished production taken into stock in the month was 2,500 units. At the end of the month, the work-in-progress inventory was 500 units, 80% complete as regards materials and 60% complete as regards labor and overhead. You are required to prepare process account.

A company follows process costing and manufactures a product in one process. The work-in-progress at the end of each month is valued according to FIFO method. At the beginning of the month of January, the inventory of work-in- progress showed the 400 units, 40% completed, valued at RO 8000. In the month of January 2600 units amounting to RO 68,500 were introduced into the process. Wages and overheads amounted to RO 79,200 and RO 21,120, respectively. Finished production taken into stock in the month was 2,500 units. At the end of the month, the work-in-progress inventory was 500 units, 80% complete as regards materials and 60% complete as regards labor and overhead. You are required to prepare process account.

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Description: A company follows process costing and manufactures a product in one process. The work-in-progress atthe end of each month is valued according to FIFO method. At the beginning of the month of January,the inventory of work-in- progress showed the 400

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter5: Process Cost Accounting—general Procedures

Section: Chapter Questions

Problem 16E: Chavez Concrete Inc. has two production departments. Blending had 1,000 units in process at the...

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Rockford Company has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and Assembly. The direct labor hour method is used to apply factory overhead to the jobs being worked on in Machining and Assembly. The company expects each production department to use 30,000 direct labor hours during the year. The estimated overhead rates for the year include the following: During the year, both Machining and Assembly used 28,000 direct labor hours. Factory overhead costs incurred during the year follow: In determining application rates at the beginning of the year, cost allocations were made as follows, using the sequential distribution method: Building Maintenance to: General Factory Overhead, 10%; Machining, 50%; Assembly, 40%. General factory overhead was distributed according to direct labor hours. Required: Determine the under- or overapplied overhead for each production department. (Hint: First you must distribute the service department costs.)
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Abbey Products Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, 60,000; estimated materials costs, 50,000; estimated direct labor costs, 60,000; estimated direct labor hours, 10,000; estimated machine hours, 20,000; work in process at the beginning of the month, none. The actual factory overhead incurred for November was 80,000, and the production statistics on November 30 are as follows: Required: 1. Compute the predetermined rate, based on the following: a. Direct labor cost b. Direct labor hours c. Machine hours 2. Using each of the methods, compute the estimated total cost of each job at the end of the month. 3. Determine the under-or overapplied factory overhead, in total, at the end of the month under each of the methods. 4. Which method would you recommend? Why?