CASE/PROBLEM100 PTS DUE DATE: Monday, January 29th Specific Course Outcomes Asse
ID: 2610198 • Letter: C
Question
CASE/PROBLEM100 PTS DUE DATE: Monday, January 29th Specific Course Outcomes Assessed: (See Course Syllabus) Describe the similarities and the differences between job-order and process costing, and develop schedules to report manufacturing costs to management DATA: Targon, Inc., manufactures lawn equipment. A job-order costing system is used, since the products are manufactured in continuous basis. The company started o Operating activities during the first 11 months of the year (through November 30 batches rather than on a perations on January 1, 2016 resulted in the folowing balances in selected accountsa Dr. Cr. Balance 11/30/2016 36,000 MANUFACTURING OVERHEAD Dr Cr 2.260,000 Balance 12/31/2016 WORK IN PROCESS Dr Cr Balance 11/30/2016 1,210,000Explanation / Answer
We have 3 similarities between job order costing and process costing systems:
1. Both systems have the assignment process same for material, labor, and overhead costs to products and to provide mechanism for computing unit product cost.
2. Both systems use the same basic manufacturing accountants, including manufacturing overhead, Raw materials, Work in process, and Finished Good.
3. The flow of costs through the manufacturing accounts is basically the same in both systems.
Now let us describe the differences between two costing systems:
1. Under job costing costs are accumulated by individual job, whereas under process costing costs are accumulated by departments.
2. Under job costing Job cost sheet is the important document which controls the accumulation of costs by a job.
Under process costing the production department report is the key document, thus shows the accumulation and disposition of costs.
3. Under job costing unit costs are computed by job on the job cost sheet and for process costing unit cost are computed by department on the department production report.
Schedules to report manufacturing cost to management:
We can develop two schedules first will be work in progress and the second one will be finished goods inventory schedule:
Let us start with Work in progress schedule:
Estate
Economy
Deluxe
Brass
Rainmaker
Connectors
Ring
Work in Process, Beginning
710,000
490,000
Add:
Direct Material
210,000
6,000
92,000
181,000
163,000
Direct Labor
62,000
26,000
5,000
182,000
52,000
Manufacturing Overhead
36,000
15,000
3,000
108,000
30,000
Total Cost to Account For
1,018,000
537,000
100,000
-
471,000
-
245,000
Total Goods Transferred to FGI
1,018,000
537,000
471,000
245,000
Work in Process, Ending
100,000
Number Goods Transferred
50,000
40,000
30,000
50,000
Unit Cost
$ 20.360
$ 13.425
$ 15.700
$ 4.900
Finished goods inventory:
Inventory
Sold Under LIFO
Remaining Units
No. of Units
Unit Cost
No. of Units
Unit Cost
No. of Units
Unit Cost
Total Cost
Estate
Beginning Balance
5,000
$ 22.00
5,000
$ 22.00
$ 110,000.00
Goods Transferred
50,000
$ 20.36
16,000
$ 20.36
34,000
$ 20.36
$ 692,240.00
$ 802,240.00
Deluxe
Beginning Balance
115,000
$ 17.00
32,000
$ 17.00
83,000
$ 17.00
$ 1,411,000.00
Goods Transferred
Brass
Beginning Balance
10,000
$ 14.00
5,000
$ 14.00
5,000
$ 14.00
$ 70,000.00
Goods Transferred
Rainmaker
Beginning Balance
5,000
$ 16.00
5,000
$ 16.00
$ 80,000.00
Goods Transferred
30,000
$ 15.70
10,000
$ 15.70
20,000
$ 15.70
$ 314,000.00
$ 394,000.00
Connectors
Beginning Balance
100,000
$ 5.00
26,000
$ 5.00
74,000
$ 5.00
$ 370,000.00
Goods Transferred
Economy
Beginning Balance
Goods Transferred
40,000
$ 13.43
20,000
$ 13.43
20,000
$ 13.43
$ 268,500.00
Ring
Beginning Balance
Goods Transferred
50,000
$ 4.90
22,000
$ 4.90
28,000
$ 4.90
$ 137,200.00
Therefore, Balance of finished goods inventory as on December 31 (by using LIFO)
Estate
$ 802,240.00
Economy
$ 268,500.00
Deluxe
$1,411,000.00
Brass
$ 70,000.00
Rainmaker
$ 394,000.00
Connectors
$ 370,000.00
Ring
$ 137,200.00
Estate
Economy
Deluxe
Brass
Rainmaker
Connectors
Ring
Work in Process, Beginning
710,000
490,000
Add:
Direct Material
210,000
6,000
92,000
181,000
163,000
Direct Labor
62,000
26,000
5,000
182,000
52,000
Manufacturing Overhead
36,000
15,000
3,000
108,000
30,000
Total Cost to Account For
1,018,000
537,000
100,000
-
471,000
-
245,000
Total Goods Transferred to FGI
1,018,000
537,000
471,000
245,000
Work in Process, Ending
100,000
Number Goods Transferred
50,000
40,000
30,000
50,000
Unit Cost
$ 20.360
$ 13.425
$ 15.700
$ 4.900
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