Poma Africa Ltd manufacture tennis racquets. The company uses the job costing system to cost its production. The following information relates to Poma Africa Ltd for the month of April 2020: Schedule of costs relating to jobs in process as at 31 March 2020 Job Direct Material Direct Labour Overheads Total A33 1 050 2 100 315 3 465 C23 3 300 5 900 920 10 120 Schedule of costs incurred on jobs during April 202 Job (No of units) Direct Material Direct Labour A33 (20 racquets) 2 400 450 C23 (55 racquets) 11 800 2 300 F54 (25 racquets) 3 700 690 L49 (15 racquets) 1 300 350 Additional information · Factory overheads are applied at a rate of 10% of total direct cost. The only job still in process at 30 April 2020 was L49. All other jobs were completed during the month. Job C23 was completed at a total cost of R25 630, this amount includes applied overhead costs of R1 410. Sales during April were as follows: A33: All 20 racquets were sold at cost plus 40% mark‐up. F54: 23 racquets were sold at a price of R290 per racquet. C23: All 55 racquets were sold at cost plus 35% mark‐up. Actual factory overheads for April 2020 were R3 250. Marketing and distribution expenses amount to R4 700 for the month of April 2020. Ignore spoilage. 1.) Calculate the net income for the month of April 2020 2.) Calculate the over/under applied overhead for April 2020.
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.
Poma Africa Ltd manufacture tennis racquets. The company uses the
|
Schedule of costs relating to jobs in process as at 31 March 2020 |
||||
|
Job |
Direct Material |
Direct Labour |
|
Total |
|
A33 |
1 050 |
2 100 |
315 |
3 465 |
|
C23 |
3 300 |
5 900 |
920 |
10 120 |
|
Schedule of costs incurred on jobs during April 202 |
||
|
Job (No of units) |
Direct Material |
Direct Labour |
|
A33 (20 racquets) |
2 400 |
450 |
|
C23 (55 racquets) |
11 800 |
2 300 |
|
F54 (25 racquets) |
3 700 |
690 |
|
L49 (15 racquets) |
1 300 |
350 |
Additional information · Factory overheads are applied at a rate of 10% of total direct cost.
- The only job still in process at 30 April 2020 was L49. All other jobs were completed during the month.
- Job C23 was completed at a total cost of R25 630, this amount includes applied overhead costs of R1 410.
- Sales during April were as follows: A33: All 20 racquets were sold at cost plus 40% mark‐up. F54: 23 racquets were sold at a price of R290 per racquet. C23: All 55 racquets were sold at cost plus 35% mark‐up.
- Actual factory overheads for April 2020 were R3 250. Marketing and distribution expenses amount to R4 700 for the month of April 2020.
- Ignore spoilage.
1.) Calculate the net income for the month of April 2020
2.) Calculate the over/under applied overhead for April 2020.
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