ACCT 3224 Lecture Notes - Lecture 13: Cost Accounting, Income Statement, Mass Production

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peachgoldfish488

8 Feb 2020

School

Mount Royal University

Department

Accounting

Course

ACCT 3224

Professor

Janne Holgrem

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Document Summary

Job order costing: cost accounting systems, process costing. Job order costing: job order costing, overview job cost sheet. Journal entries and t accounts: over-applied and under-applied manufacturing overhead, year end financial statements, schedule of cost of goods manufactured. Large production volume: single homogeneous product, units produced are indistinguishable, mass production of like units, unit cost = total manufacturing costs / units manufactured, ex. Lower volume of production: variety / differing products, output is unique, one of a kind, custom made etc, no average to calculate unit cost, a distinct unit cost is calculating for each finished product, ex. Overview of job order costing: raw materials, are requisitioned for use in production (p. 156 ex. 5-1: a raw materials requisition form is completed, that information is recorded on a job cost sheet (p. 157 ex. 5-2: direct labour, time cards or time sheets are completed and approved by a manager (p. 158 ex.

Related Questions

Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

byzantiumpanda529

Batchelor Company manufactures custom accounting ledgers using ajob-order costing system. Manufacturing Overhead is applied to eachjob as a predetermined rate of 150% of Direct Labor cost. Any underapplied overhead is prorated between work in process, FinishedGoods, and Cost of Goods Sold based on the amount of manufacturingoverhead in their ending balances at the end of each month.

Additional formation:

1. Job 100 was completed but unsold as of 1/31/2016 with actualincurred costs as follows: Direct materials = $3,900 and DirectLabor =$ 2,400

2. Job 101 was the only job in process on 1/31/2016 with actualincurred costs as follows: Direct Materials = $3,300 and DirectLabor = $2,700

3. Job 102, 103, 104, and 105 were started on February 2016

4. Direct Material used in production during February totaled$16,000

5. The total Cost of Goods Manufactured for February was$68,750

6. Actual manufacturing Overhead was $36,000 for February

7. The only job still in process on 2/28/2016 was job 105 whichhas actual incurred costs of $2,800 for Direct Materials and $1,800for Direct Labor

8. The only completed job left unsold on 2/28/2016 was job 104which has actual incurred costs of $3,500 for direct materials and$4,500 for direct labor

A. Calculate the Cost of Goods for Febuary after closing theunder/over applied overhead.

amethystbutterfly904

Basic Job Costing Project

Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.

At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.

The following information pertains to December of the current year:

	Job 10	Job 11	Job 12	Total
Work-in-process, Dec. 1	$16,000	$26,000	$38,000	$80,000

The following transactions took place during the month of December:

1. Purchased raw materials for $25,000 on credit;

2. Requisitioned and used direct materials for the three jobs:

a. $4,000 for Job 10

b. $4,800 for Job 11

c. $7,200 for Job 12

3. Used indirect materials worth $20,000

4. . Incurred direct labor costs as follows:

a. $ 2,400 for Job 10

b. $3,600 for Job 11

c. $4,000 for Job 12

5. Incurred $30,000 worth of indirect manufacturing labor costs.

6. Depreciation on manufacturing plant and equipment $21,000.

7. During the month of December, the company used the following direct labor hours and machine hours for the three jobs:

	Job 10	Job 11	Job 12	Total
Machine hours	400	700	900	2,000
Labor hours	120	180	200	500

Required:

1. Compute the predetermined overhead application rate.

2. Prepare the journal entries for the transactions that took place in December and apply manufacturing overhead to the jobs using the actual machine hours.

3. Determine the total cost associated with each job.

4. If jobs 10 and 12 were completed, prepared the journal entry to move jobs 10 and 12 to finished goods.

5. Delivered job 10 to customers that paid $40,000 cash; prepare the journal entries to sell job 10 and to recognize the associated cost of goods sold.

6. What is the cost assigned to ending work in process (control account)?

7. What is the cost assigned to ending finished goods (control account)?

8. How much was manufacturing overhead over/underapplied?

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ACCT 3224 Lecture Notes - Lecture 13: Cost Accounting, Income Statement, Mass Production

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