The company uses FIFO method of calculating equivalent units. The paint is inspected at the end of the production process. Any spoiled gallons are removed and discarded at inspection; a machine malfunction or an improper blending of a batch of paint usually causes spoilage.
Additionally, as in Case 1, the unit reduction is assumed to occur from shrinkage. The quality control inspection point is at the end of the processing. No shrinkage occurs. When the FIFO cost flow assumption is used, a complicating problem arises. This involves determining which category of completed units the spoilage came from.
It is the usual treatment because it is not practical to identify the source of each spoiled or lost unit. However, if the spoiled or lost units are assumed to have come from the beginning work in process, then only the equivalent work performed on them during the period is included in the denominator. This is complicated! Hence, Board questions where spoiled units are sourced from Beginning WIP which passed through inspection during the period will usually assume that any spoiled or lost units come from the Beginning WIP included in the units completed and transferred out during the period.
With this assumption, the treatment of spoiled and lost units is essentially the same in both FIFO and weighted average. It is possible though for Board questions to include FIFO scenarios where spoilage comes good units units inspected during the period and where the good units referred to are coming from Units Started and Inspected and Ending WIP.
These are the scenarios we discussed in BA see below. See Note In Case 7. The major portion of materials are placed in production at the beginning of processing in the Glazing Department, with a small amount of materials being added at various times through the first half of the process. There is no change in the number of units as a result of the addition of materials.
Labor and overhead costs are incurred evenly throughout the process. Some of the pottery pieces are spoiled because of misapplication of glaze or improper machine handling. Job costing p. Job costing f. Process costing q. Job costing g. Job costing r.
Process costing h. Job costing but some process costing s. Job costing i. Process costing t. Process costing j. Process costing u. Job costing k. Job costing 20 min. Actual costing, normal costing, accounting for manufacturing overhead.
Budgeted manufacturing Budgeted manufacturing overhead costs 1. This, of course equals the actual manufacturing overhead costs. All actual overhead costs are allocated to products. Hence, there is no under- or overallocatead overhead. Job costing, normal and actual costing. Normal costing enables Anderson to report a job cost as soon as the job is completed, assuming that both the direct materials and direct labor costs are known at the time of use. Anderson can use this information to manage the costs of the Laguna Model job as well as to bid on similar jobs later in the year.
Budgeted manufacturing overhead rate, allocated manufacturing overhead. Budgeted manufacturing overhead 1. Job costing, accounting for manufacturing overhead, budgeted rates. Job costing, consulting firm. Service industry, time period used to compute indirect cost rates. If Printers, Inc. In this calculation, more variable manufacturing overhead costs are allocated to jobs in the first quarter, reflecting the larger costs of that quarter caused by higher overtime and facility and machine maintenance.
This method better captures the cost of congestion during the first quarter. Accounting for manufacturing overhead. Job costing, journal entries. Some instructors may also want to assign Exercise It demonstrates the relationships of the general ledger to the underlying subsidiary ledgers and source documents.
Materials Control Bal. T-accounts Direct Materials Control Bal. Some instructors may wish to assign Problem It demonstrates the relationships of journal entries, general ledger, subsidiary ledgers, and source documents. Labor 2. Amounts in millions.
Job costing, unit cost, ending work in progress. Raymond Company began May with no work-in-process inventory. During May, it started and finished M1. It also started M2, which is still in work-in-process inventory at the end of May. Job costing; actual, normal, and variation from normal costing.
The budgeted hours for the Pierre Enterprises audit job is not used in job costing. However, Chirac may have used the hour number in bidding for the audit. Job order costing: actual, normal, and variation from normal costing. Proration of overhead. All overallocated plant overhead is written off to cost of goods sold. Both work in process WIP and finished goods inventory remain unchanged. Overallocated plant overhead prorated based on ending balances: Dec.
Overallocated plant overhead prorated based on overhead in ending balances: Allocated Dec. Allocated Manuf. Both these conditions apply in this case. An overview of the job-costing system is: 2. Budgeted manufacturing overhead divided by allocation base: a. A homogeneous cost pool is one where all costs have the same or a similar cause-and-effect or benefits-received relationship with the cost-allocation base.
Solomon likely assumes that all its manufacturing overhead cost items are not homogeneous. Specifically, those in the Machining Department have a cause-and-effect relationship with machine-hours, while those in the Finishing Department have a cause-and-effect relationship with direct manufacturing labor costs. Solomon believes that the benefits of using two cost pools more accurate product costs and better ability to manage costs exceeds the costs of implementing a more complex system.
Service industry, job costing, law firm. Budgeted professional Budgeted direct labor compensation per professional 2. Service industry, job costing, two direct- and indirect-cost categories, law firm continuation of Thus, the Richardson job is a relatively high user of the more costly partner-related resources both direct partner costs and indirect partner secretarial support.
The refined-costing system in Problem increases the reported cost in Problem for the Richardson job by Manufacturing overhead Manufacturing overhead Manufacturing overhead 2.
Proration based on the allocated overhead amount before proration in the ending balances of Work in Process, Finished Goods, and Cost of Goods Sold.
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