Barnes Company uses a job order cost system. The following data summarize the operations related to production for October: October 1 Materials purchased on account, $315,500. 2 Materials requisitioned, $290,100, of which $8,150 was for general factory use. 31 Factory labor used, $489,500, of which $34,200 was indirect. 31 Other costs incurred on account for factory overhead, $600,000; selling expenses, $150,000; and administrative expenses, $100,000. 31 Prepaid expenses expired for factory overhead were $18,000; for selling expenses, $6,000; and for administrative expenses, $5,000. 31 Depreciation of office building was $30,000; of office equipment, $7,500; and of factory equipment, $60,000. 31 Factory overhead costs applied to jobs, $711,600. 31 Jobs completed, $1,425,000. 31 Cost of goods sold, $1,380,000. CHART OF ACCOUNTS Barnes Co. General Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 132 Work in Process 133 Factory Overhead 134 Finished Goods 141 Supplies 142 Prepaid Insurance 143 Prepaid Expenses 181 Office Building 191 Office Equipment 192 Accumulated Depreciation-Buildings and Equipment LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 241 Lease Payable 251 Wages Payable 252 Consultant Fees Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Office Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Office Building 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense
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.
October | 1 | Materials purchased on account, $315,500. |
2 | Materials requisitioned, $290,100, of which $8,150 was for general factory use. | |
31 | Factory labor used, $489,500, of which $34,200 was indirect. | |
31 | Other costs incurred on account for factory |
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31 | Prepaid expenses expired for factory overhead were $18,000; for selling expenses, $6,000; and for administrative expenses, $5,000. | |
31 | ||
31 | ||
31 | Jobs completed, $1,425,000. | |
31 | Cost of goods sold, $1,380,000. |
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