Chapter 15
Job Order Costing and Analysis
QUESTIONS
1. Factory overhead is not identified with specific units (jobs) or batches (job lots).
Therefore, to assign costs, estimates of the relation between factory overhead cost
2. Several other factors (allocation bases) are possible and reasonable. These common
factors often include direct materials or machine hours.
3. The job order cost sheet captures information on cost and quantity of direct material
production and to estimate total cost of production.
4. Each job is assigned a subsidiary ledger account. This account serves as the
“posting account” (accumulates all increases and decreases) during production for
direct material, direct labor, and applied factory overhead. The collection of job cost
5. A debit (increase) to Work in Process Inventory for direct materials, a debit (increase)
6. The materials requisition slip is designed to track the movement of materials from
7. The time ticket is used to record how much time an employee spends on each job.
8. Debits (increases) to factory overhead are the recording of actual overhead costs,
9. Assuming that the overapplied or underapplied overhead is immaterial, it is closed to
the Cost of Goods Sold account. However, if the amount is material—meaning it
10. This production run should be accounted for as a job lot (batch). Although individual
iPhones could be viewed as individual jobs, the costs of tracking this detailed
11. A predetermined factory overhead rate must be calculated for at least two reasons:
(1) Not all costs are known in advance, yet the costs must be applied to products
during the current period. (2) A predetermined rate is used to spread indirect costs
12. Each patient in a hospital can be viewed as a “job.” In this case, a job order cost
13. Each of the 30 luxury motorcycles will likely be accounted for as an individual job.
Although similar in many respects, each would have custom features that would
14. Sprint employees can use job cost sheets to accumulate the costs (e.g. labor and
materials) used on each job. Managers can use this job cost information to monitor
QUICK STUDIES
Quick Study 15-1 (5 minutes)
Manufactured as a job: 3, 4, 6
Quick Study 15-2 (10 minutes)
Quick Study 15-3 (10 minutes)
Finished Goods Inventory……….…………………..…..…....10,500
Work in Process Inventory……….………………..….….. 10,500
To transfer cost of completed job to Fin. Goods.
Quick Study 15-4 (15 minutes)
Raw Materials Inventory……………………..……….…..….…50,000
Cash…………………………………..………………….………… 50,000
To record raw material purchases.
Quick Study 15-5 (10 minutes)
Work in Process Inventory…………..………………..….…...140,000
Factory Wages Payable………………..…..…..….…..…. 140,000
To record direct labor.
Quick Study 15-6 (10 minutes)
1. Factory overhead, $117,000 / Direct labor, $468,000 = 25%
Quick Study 15-7 (10 minutes)
Work in Process Inventory…………..………………..….…...117,900
Factory Overhead………….………………..………….….... 117,900
To apply overhead [($175,000–$44,000) x 90%].
Quick Study 15-8 (5 minutes)
Quick Study 15-9 (5 minutes)
Factory Overhead……….…………………….……………..…....22,000
Quick Study 15-10 (15 minutes)
Cost of Goods Sold………………………………………….…....50,000
Quick Study 15-11 (10 minutes)
Overhead Applied
Job 1 ($5,000 x 40%)…..….…......... $2,000
Job 2 ($7,000 x 40%)…..….….........
Job 3 ($1,500 x 40%)…..….….........
2,800
600
Quick Study 15-12 (10 minutes)
1.
JOB COST SHEET
Job 1
Direct materials……………….…………………………..…..….…..….…
Direct labor………………..……………….……………….…..….…..….…
$ 5,000
9,000
Factory overhead (From QS 15-11)..….……………………………… 2,000
Total ……………………………..……………..………………………..…..…. $16,000
JOB COST SHEET
Job 2
Direct materials……………….…………………………..…..….…..….…
$ 7,000
JOB COST SHEET
Job 3
Direct materials……………….…………………………..…..….…..….…
$1,500
3. The balance in the Finished Goods Inventory account equals $13,800,
Quick Study 15-13 (10 minutes)
JOB COST SHEET
Direct labor ($50 x 200)…………………………………..………….….. $10,000
Quick Study 15-14 (5 minutes)
Since each car is custom-ordered, Porsche produces in jobs rather in job
EXERCISES
Exercise 15-1 (10 minutes)
Exercise 15-2 (15 minutes)
JOB COST SHEET: Job 9-1005
Direct materials
Q-4698.…………………………………....$1,250
Q-4725………………..….…..….…..…… 1,000 $2,250
Direct labor
Exercise 15-3 (25 minutes)
1.The cost of direct materials requisitioned in the month equals the total
direct materials costs accumulated on the three jobs less the amount of
direct materials cost assigned to Job 102 in May:
Job 102 …………………………………….…………..… $15,000
Less prior costs………………..….…..…..…..….... ( 6,000 ) $ 9,000
2.Direct labor cost incurred in the month equals the total direct labor
costs accumulated on the three jobs less the amount of direct labor cost
assigned to Job 102 in May:
Job 102 …………………………………….………………....$8,000
Less prior costs…………………….…..……….…..…... (1,800 ) $ 6,200
Job 103 …………………………………….……………….... 14,200
3.The predetermined overhead rate equals the ratio of the amount of
overhead assigned to jobs divided by the amount of direct labor cost
assigned to them. Since the same rate is used for all jobs started and
completed within a month, the ratio for any one job equals the rate that
was applied. This table shows the ratio for jobs 102 and 104:
Job 102 Job 104
Overhead……………..……………………..………………..$ 4,000 $10,500
4.The cost transferred to finished goods in June equals the total costs of
the two completed jobs for the month, which are Jobs 102 and 103:
Job 102 Job 103 Total
Direct materials……………..….…..…... $15,000 $33,000 $48,000