Question

Transactions in a Job Order Cost System Five selected transactions for the current month are indicated by letters in the following T accounts in a job order cost accounting system: Materials Work in Process (a) (a) (d) (b) (c) Wages Payable Finished Goods (b) (d) (e) Factory Overhead Cost of Goods Sold (a) (c) (e) (b) Describe each of the five transactions.

Answer 1

Each of five transactions can be defined as follows:

a) Authorization for use of materials (both direct and indirect).

b) Work used in the factory  (both direct and indirect).

c) Factory over-the-counter application to employment.

d) Fulfilled jobs.

e) Goods selling costs.

Following are the description of the transaction:

For a)

• A document which the manufacturing company prepares to ask for materials they need to finish production is a material requirement.
• It is also a material request or materials requirements document.
• The document the requester will retain a copy of the form, just as do the warehouse personnel.

For b)

• The plant system is a production process utilizing machinery & manpower divisions.
• Due to the increasing price of capital for machinery & building, facilities often belonged privately to rich workers who've worked on the job.

For c)

• The overhead manufacturing costs are added or applied to each work during the manufacturing process.
• Those costs will be included in the processing costs in conjunction with direct material and direct.

For d)

• Work is finished by the operational and structural completeness of the project/works, the Commissioning has been carried thru in line with technical specs.

For e)

• The direct cost of producing the commodities sold by a corporation is referred to as the costs of the materials and the work required directly to produce the goods is included.
• Indirect spending, such as distribution and sales force expenses, is excluded.

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