Calculating the costs linked with the miscellaneous procedures within a process costing system is just a part of the accounting procedure. Journal entries are used to record and report the financial information relating to the transactions. The example that follows illustrates exactly how the journal entries reflect the process costing device by recording the circulation of products and prices with the process costing environment.
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Purchased Materials for Multiple Departments
Each department within Rock City Percussion has a sepaprice occupational 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 entry to document the purchases on account is:
Throughout July, the packaging department requisitioned $2,000 in direct material and also overhead costs for instraight 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 expenses and indirect labor of $1,000. The journal enattempt to record the labor expenses is:
Rock City Percussion identified that machine hours is the proper base to use as soon as allocating overhead. The estimated yearly overhead expense is $340,000 per year. It was also estimated that the full machine hours will be 34,000 hrs, so the alplace price is computed as:
The finishing department provided 910 machine hours, and via an overhead application rate of $10 per direct labor hour, the journal entry to record the overhead alplace is:
Transferred Goods from the Packaging Department to Finiburned GoodsThe computation of inventory for the packaging department is presented in (Figure).
Recording the Cost of Goods Sold Out of the Finimelted Goods InventoryEach unit is a package of 2 drumsticks that cost $8.40 to make and also sells for $24.99. Tright here are two transactions as soon as recording a sale. One entry is to deliver the inventory from finished items inventory to price of products offered and is at the price of the product. The second transaction is to document the sale at the sales price. The compound enattempt to record both transactions for the sale of 500 systems on account is:
The prestige of properly recording the manufacturing procedure is depicted in this report on occupational in procedure inventory from InventoryOps.com.
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