Calculating the prices linked with the miscellaneous processes within a process costing device is only a component of the accountancy procedure. Journal entries are provided to record and also report the financial information relating to the transactions. The instance that adheres to illustrates just how the journal entries reflect the procedure costing system by recording the circulation of goods and prices with the process costing setting.
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Purchased Materials for Multiple Departments
Each department within Rock City Percussion has a separate work in process inventory account. Raw products totaling $33,500 were ordered prior to being requisitioned by each department: $25,000 for the shaping department and $8,500 for the packaging department. The July 1 journal enattempt to document the purchases on account is:
During July, the packaging department requisitioned $2,000 in direct product and overhead costs for indirect product totaled $300 for the month of July. The journal enattempt to record the requisition and also consumption of materials is:
Throughout July, the packaging department incurred $13,000 of straight labor prices and also instraight labor of $1,000. The journal enattempt to document the labor costs is:
Rock City Percussion identified that machine hours is the appropriate base to use once allocating overhead. The estimated yearly overhead price is $340,000 per year. It was additionally approximated that the full machine hours will be 34,000 hrs, so the alplace price is computed as:
The finishing department used 910 machine hours, and via an overhead application rate of $10 per straight labor hour, the journal enattempt to document the overhead alplace is:
Transferred Goods from the Packaging Department to Finished GoodsThe computation of inventory for the packaging department is displayed in (Figure).
Recording the Cost of Goods Sold Out of the Finimelted Goods InventoryEach unit is a package of 2 drumsticks that expense $8.40 to make and sells for $24.99. Tbelow are 2 transactions when recording a sale. One entry is to deliver the inventory from finiburned products inventory to price of items marketed and is at the cost of the product. The second transaction is to document the sale at the sales price. The compound enattempt to document both transactions for the sale of 500 units on account is:
The prominence of properly recording the production process is portrayed in this report on job-related in process inventory from InventoryOps.com.
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