Chapter 19 – Job Order Costing
Exercise 19-19 (15 minutes)
(1) Raw Materials Inventory……………………..………………….3,108
Accounts Payable…………………………………………….. 3,108
To record raw material purchases.
(2) The amount of materials purchased is almost equal to the amount of
PROBLEM SET A
Problem 19-1A (80 minutes)
Part 1 Total manufacturing costs and the costs assigned to each job
306 307 308 April Total
From March
Direct materials……….............$ 29,000 $ 35,000
Direct labor…………………........ 20,000 18,000
Applied overhead*……..………. 10,000 9,000
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Chapter 19 – Job Order Costing
Part 2 Journal entries for April
a. Raw Materials Inventory……………………..………………….500,000
Accounts Payable…………………………………………….. 500,000
To record materials purchases.
e. Work in Process Inventory……………………………………..170,000
Factory Overhead…………………………………………….. 170,000
To apply overhead to jobs.
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Chapter 19 – Job Order Costing
Problem 19-1A (continued)
f. [continued from prior page]
Factory Overhead…………………………………………………..
50,000
Raw Materials Inventory………………..…………………. 50,000
To record indirect materials.
To record factory rent.
g. Finished Goods Inventory (306 & 307)……………………..828,500
Work in Process Inventory……………………………….. 828,500
To record jobs completed ($321,500 + $507,000).
j. Cost of Goods Sold………………………………………..………5,000
Factory Overhead*…………………………………………… 5,000
To assign underapplied overhead.
*Overhead applied to jobs...... $170,000
Factory equip. depreciation……. 51,000 175,000
Underapplied overhead………….. $ 5,000
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Chapter 19 – Job Order Costing
Problem 19-1A (Continued)
Part 3
MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct materials used……………………………………………...……..…. $ 455,000
Direct labor used…………………………………………………..……..…… 340,000
Part 4
Gross profit on the income statement for the month ended April 30
Sales……………………………………………………………………………………..…….. $ 635,000
Presentation of inventories on the April 30 balance sheet
Inventories
Raw materials ………………………………………………………………..…..……..… $ 75,000*
* Beginning raw materials inventory…………………….………….……....…........….....$ 80,000
Purchases………………………………………………………………………………..…..……....500,000
Part 5
Overhead is underapplied by $5,000, meaning that individual jobs or batches of
jobs are under-costed. Thus, profits at the job (and batch) level are overstated.
Problem 19-2A (75 minutes)
Part 1
a.
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Chapter 19 – Job Order Costing
b.
Dec. 31 Work in Process Inventory……………………………………..59,800
Wages Payable………………………..……………..……….. 59,800
To record direct labor costs for
Jobs 402 and 404 ($36,000 + $23,800).
c.
Dec. 31 Work in Process Inventory……………………………………..119,600
d.
Dec. 31 Factory Overhead…………………………………………………..5,600
Raw Materials Inventory………………..…………………. 5,600
To add cost of indirect materials
to actual factory overhead.
e.
Part 2
Revised Factory Overhead account
Ending balance from trial balance…….………..…..…............…....$115,000 debit
Applied to Jobs 402 and 404……..……….……...…............….........(119,600) credit
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Chapter 19 – Job Order Costing
Problem 19-2A (continued)
Part 3
BERGAMO BAY COMPANY
Trial Balance
December 31, 2015
Debit Credit
Cash ……………………………………………………..…………………$170,000
Accounts receivable………………………………………..……..… 75,000
Raw materials inventory*…………………………..……………… 45,600
Work in process inventory**…………………………..…………. 208,200
Finished goods inventory ………………………..………………. 15,000
Retained earnings ………………………………………………..….. 271,000
Sales ……………………………………………………………………….. 373,000
Cost of goods sold ($218,000 + $9,200)……………………..…… 227,200
Factory overhead……………………………………………………… 0
Operating expenses…………………….…………..………………. 60,000 _______
Ending balance………………………………………………....…..……..…..…..….$45,600
** Work in process inventory
Job 402 Job 404 Total
Direct materials……………… $ 10,200 $18,600 $ 28,800
Direct labor……………………. 36,000 23,800 59,800
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Chapter 19 – Job Order Costing
Problem 19-2A (continued)
Part 4
BERGAMO BAY COMPANY
Income Statement
For Year Ended December 31, 2015
Sales…………………………………………………………………….……..………$373,000
Cost of goods sold……………………………………………………….……… (227,200)
BERGAMO BAY COMPANY
Balance Sheet
December 31, 2015
Assets
Finished goods inventory…………………………………………... 15,000 268,800
Prepaid rent……………………………………………………..………… 3,000
Total assets……………………………………………………….……….. $516,800
Liabilities and equity
Accounts payable……………………………………………………….. $ 17,000
Wages payable…………………………………………………………….
Notes payable……………………………………………………………..
68,000
25,000
Total liabilities and equity……………………………………………. $516,800
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Chapter 19 – Job Order Costing
Problem 19-2A (concluded)
Part 5
This $5,600 error would cause the costs for Job 404 to be understated.
Since Job 404 is in process at the end of the period, work in process
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