Selected information from Skybox Studios shows the following: Raw Material Purchased $5,000 Direct Materials $1,500 Direct Labor $11,000 Factory Depreciation $2,000 Total Manufacturing Overhead Incurred $15,000 Machine Hours Per Month 28,000 Unit Cost for Materials $2 Unit Cost of Conversation $8 Number units transferred 15,000 Prepare journal entries to record the following: a. Raw material purchased b. Direct labor incurred c.Depreciation expense (hint: this is part of manufacturing overhead)
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.
Selected information from Skybox Studios shows the following:
Raw Material Purchased $5,000
Direct Materials $1,500
Direct Labor $11,000
Factory
Total Manufacturing Overhead Incurred $15,000
Machine Hours Per Month 28,000
Unit Cost for Materials $2
Unit Cost of Conversation $8
Number units transferred 15,000
Prepare
a. Raw material purchased
b. Direct labor incurred
c.Depreciation expense (hint: this is part of manufacturing overhead)
d. Raw materials used
e. Overhead applied on the basis of $0.50 per machine hour
f.The transfer from department 1 to department 2
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Meaning of Cost Accounting System :-
The Cost Accounting system is meant for simplifying the work of the manufacturers, who need to track the flow of inventory on a continuous basis through various stages of production. Cost accounting is one of the parts of management accounting that determines the actual cost associated with manufacturing a product. It is done for the purpose of budget preparation and profitability analysis. The information derived from this process is useful to managers in determining which products, departments or services are most profitable and which ones need improvement.
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