Enter the following entries for the month of August 2021. Purchased raw materials on account, $3,100. Selling and Administrative expenses incurred and paid, $1,200. Used direct materials, $3,900. Used indirect materials, $300. Manufacturing wages incurred totaled $4,000, of which 90% was direct labor and 10% was indirect labor. Incurred other actual factory overhead on account, $1,300. Factory Overhead was allocated to Work in Process Inventory at a predetermined overhead allocation rate of 60% of Direct Labor costs incurred during August. The cost of product completed, $10,000. Sales on account, $17,500. The cost of the units sold was $9,500. Prepare and enter the necessary adjusting entry to correct for the overallocated or underallocated Factory 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.
Enter the following entries for the month of August 2021.
- Purchased raw materials on account, $3,100.
- Selling and Administrative expenses incurred and paid, $1,200.
- Used direct materials, $3,900.
- Used indirect materials, $300.
- Manufacturing wages incurred totaled $4,000, of which 90% was direct labor and 10% was indirect labor.
- Incurred other actual factory overhead on account, $1,300.
- Factory Overhead was allocated to Work in Process Inventory at a predetermined overhead allocation rate of 60% of Direct Labor costs incurred during August.
- The cost of product completed, $10,000.
- Sales on account, $17,500. The cost of the units sold was $9,500.
- Prepare and enter the necessary
adjusting entry to correct for the overallocated or underallocated Factory Overhead.
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