Christopher's Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor cost Inventory balances at the beginning of the current year follow: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $ 15,100 5,200 20,500 The following transactions occurred during January: a. Purchased materials on account for $27,000. b. Issued materials to production totaling $21,600, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials. c. Payroll costs totaling $18,400 were recorded as follows: $11,500 for assembly workers $2,900 for factory supervision $1,300 for administrative personnel $2,700 for sales commissions d. Recorded depreciation: $4,100 for factory machines, $1,000 for the copier used in the administrative office. e. Recorded $1,500 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense. f. Paid $4,800 in other factory costs in cash. g. Applied manufacturing overhead at a rate of 200 percent of direct labor cost. h. Completed all jobs but one; the job cost sheet for the uncompleted job shows $2,300 for direct materials, $2,500 for direct labor, and $5,000 for applied overhead. i. Sold jobs costing $51,300. The revenue earned on these jobs was $66,690. Required: 1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: a. Raw Materials Inventory
Christopher's Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor cost Inventory balances at the beginning of the current year follow: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $ 15,100 5,200 20,500 The following transactions occurred during January: a. Purchased materials on account for $27,000. b. Issued materials to production totaling $21,600, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials. c. Payroll costs totaling $18,400 were recorded as follows: $11,500 for assembly workers $2,900 for factory supervision $1,300 for administrative personnel $2,700 for sales commissions d. Recorded depreciation: $4,100 for factory machines, $1,000 for the copier used in the administrative office. e. Recorded $1,500 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense. f. Paid $4,800 in other factory costs in cash. g. Applied manufacturing overhead at a rate of 200 percent of direct labor cost. h. Completed all jobs but one; the job cost sheet for the uncompleted job shows $2,300 for direct materials, $2,500 for direct labor, and $5,000 for applied overhead. i. Sold jobs costing $51,300. The revenue earned on these jobs was $66,690. Required: 1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: a. Raw Materials Inventory
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter2: Accounting For Materials
Section: Chapter Questions
Problem 8P
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Concept explainers
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.
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Christopher's Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs.
Inventory balances at the beginning of the current year follow:
Raw Materials Inventory
Work in Process Inventory
Finished Goods Inventory
$ 15,100
5,200
20,500
The following transactions occurred during January:
a. Purchased materials on account for $27,000.
b. Issued materials to production totaling $21,600, 90 percent of which was traced to specific jobs and the remainder of which was
treated as indirect materials.
c. Payroll costs totaling $18,400 were recorded as follows:
$11,500 for assembly workers
$2,900 for factory supervision
$1,300 for administrative personnel
$2,700 for sales commissions
d. Recorded depreciation: $4,100 for factory machines, $1,000 for the copier used in the administrative office.
e. Recorded $1,500 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as
an administrative expense.
f. Paid $4,800 in other factory costs in cash.
g. Applied manufacturing overhead at a rate of 200 percent of direct labor cost.
h. Completed all jobs but one; the job cost sheet for the uncompleted job shows $2,300 for direct materials, $2,500 for direct labor,
and $5,000 for applied overhead.
i. Sold jobs costing $51,300. The revenue earned on these jobs was $66,690.
Required:
1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following
accounts:
a. Raw Materials Inventory.
b. Work in Process Inventory.
c. Finished Goods Inventory.
d. Cost of Goods Sold.
e. Manufacturing Overhead.
f. Selling, General, and Administrative Expenses.
Sales Devenue
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