Job Order Costing

Instructions

1. Answer the following questions.
   
   1. What are the source documents for direct materials, direct labor, and manufacturing overhead costs assigned to this job?
   2. What is the predetermined manufacturing overhead rate?
   3. What are the total cost and the unit cost of the completed job? (Round unit cost to nearest cent.)
2. Prepare the entry to record the completion of the job.

Solution

1. Purchased raw materials on account $46,300.
2. Raw materials of $36,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,800 was classified as indirect materials.
3. Factory labor cost incurred were $59,000, of which $51,000 pertained to factory wages payable and $8,900 pertained to employer payroll taxes payable.
4. Time tickets indicated that $54,000 was direct labor and $5,900 was indirect labor.
5. Manufacturing overhead costs incurred on account were $80,500.
6. Depreciation on the company's office building was $8,1`00.
7. Manufacturing overhead was applied at the rate of 150% of direct labor costs.
8. Goods costing $88,000 were completed and transferred to finished goods.
9. Finished goods costing $75,000 to manufacture were sold on account $103,000.

Instructions

Journalize the transactions.

Solution

1. Materials purchased on account $192, 000, and factory wages incurred $87,300.
2. Materials requisitioned and factory labor used by job:
   

   Job Number	Materials	Factory Labor
   A20	$35,240	$18,000
   A21	42,920	22,000
   A22	36,100	15,000
   A23	39,270	25,000
   General Factory Use	4,470	7,300
   	$158,000	$87,300

3. manufacturing overhead costs incurred on account $49,500
4. Depreciation on Factory equipment $14,550.
5. Depreciation on the company's office building was $14,300.
6. Manufacturing overhead rate is 90% of direct labor costs.
7. Jobs completed during the quarter: A20, A21, and A23.

Instructions

Prepare entries to record the operations summarized above. (Prepare a schedule showing the individual cost elements and total cost for each job in item 7.).

Solution

1. May 1 inventories - finished goods $12,600, work in process $14,700, and raw materials $8,200.
2. May 31 inventories - finished goods $9,500, work in process $15,900, and raw materials $7,100
3. Debit postings to work in process were direct materials $62,400, direct labor $50,000, and manufacturing overhead applied $40,000.
4. Sales revenue totaled $215,000

Instructions

1. Prepare a condensed cost of goods manufactured schedule.
2. Prepare an income statement for May through gross profit
3. Indicate the balance sheet presentation of the manufacturing inventories at Ma 31, 2020.

Solution

Job 12 was completed in April. Job 10 was completed in May. Jobs 11 and 13 were completed in June. Each job was sold for 25% above its cost in the month following completion.

Instructions

1. What is the balance in Work in Process Inventory at the end of each month?
2. What is the balance in Finished Goods Inventory at the end of each month?
3. What is the gross profit for May, June, and July?

Solution

Solution

Overhead costs are applied to jobs on the basis of auditor hours, and the predeterminer overhead rate is $5 per auditor hour. The Lyn job is the only incomplete job at the end of November. Actual overhead for the month was $11,000.

Instructions

1. Determine the cost of each job.
2. Indicate the balance of the Service Contracts in Process account at the end of November.
3. Calculate the ending balanace of the Operating Overhead account for November.

Solution

The company uses Operating Overhead in place of Manufacturing Overhead

Instructions

1. Compute the predetermined overhead rate.
2. Prepare the entry to apply the overhead for the year.
3. Determine whether the overhead was under or overapplied and by how much.

Solution