The following transactions pertain to Raff Manufacturing Company. 1- The company purchased materials of $15,000 cash. 2- The company consumed (used) materials of $40,000. 3- The company paid $2 per direct hour labor 4- The overhead cost $5 per direct hour. 5- Each unit of the final product consumes 30 minutes. 6- Total produced units during the year 10,000 unit. 7- Beginning inventories: materials $30,000; WIP $2,000; FG $3,000. 8- Ending inventories: materials $5,000; WIP $2,000; FG $3,000. 9- The company sold 5,000 units $100 per unit. 10- The operational expenses were $15,000. Instructions: Prepare the income statement.
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.
The following transactions pertain to Raff Manufacturing Company.
1- The company purchased materials of $15,000 cash.
2- The company consumed (used) materials of $40,000.
3- The company paid $2 per direct hour labor
4- The
5- Each unit of the final product consumes 30 minutes.
6- Total produced units during the year 10,000 unit.
7- Beginning inventories: materials $30,000; WIP $2,000; FG $3,000.
8- Ending inventories: materials $5,000; WIP $2,000; FG $3,000.
9- The company sold 5,000 units $100 per unit.
10- The operational expenses were $15,000.
Instructions: Prepare the income statement.
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