CASEPROBLEM100 PTS DUE DATE Monday January 29th Specific Cou

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 1,210,000

Solution

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