Chapter 3 Job Costing
Job Cost Record
Job Number: 1102
Customer: Wild Birds, Inc.
Job description: 24 Model 3F (platform bird feeders)
Date Started: Sep. 14 Date Completed: ________
Manufacturing Cost Information:
Cost Summary
Direct Materials
Req. #1250
$221
Direct Labor
No. #912 (4 hours) $44
No. #913 (5 hours) $35
$ 79
Manufacturing Overhead
9 hours x $3 per direct labor hour
$ 27
Total Job Cost
$327
Number of units
÷ 24
Cost per Unit
$ 13.63
(10 min.) E3-32B
Req. 1
Calculate the predetermined overhead rate:
Predetermined
=
$63,750
overhead rate
4,250 direct labor hours
=
$15 per direct labor hour
Chapter 3 Job Costing
(continued) E3-34B
Req. 2
Job #308
Total job cost
$22,600
25% markup
× 125%
Total price to charge
$28,250
Job #308
Total job cost
$22,600
Add 25% Mark-up on manufacturing cost
(25% × $22,600)
+ 5,650
Total price to charge
$28,250
Virgin materials
150
$ 4.40
$ 660.00
Recycled-content materials
350
$ 3.20
1,120.00
Direct labor
20
$15.00
300.00
Manufacturing overhead (based on DLH)
20
$8.00
160.00
Total job cost
$2,240.00
Req. 2
Virgin materials
150
Recycled-content materials
350
70% (=350/500)
Total pounds
500
This job meets the 40% recycled-content requirement.
Managerial Accounting 4e Solutions Manual
(15 min.) E3–36B
Req. 1
Job Cost Record for Job 310
Direct Materials:
Total
Lumber: 51 units at $9 per unit
$459
Padding: 15 yards at $21 per yard
$315
Upholstery fabric: 32 yards at $25 per yard
$800
Total Direct Materials
$1,574
Direct Labor:
Yimeng Li: 8 hours at $9 per hour
$ 72
Jesse Ray: 13 hours at $13 per hour
$169
Total Direct Labor
$ 241
Manufacturing Overhead Allocated:
$8 per Direct Labor Hour x 21 direct labor hours (8 + 13)
$ 168
Total Job Cost
$1,983
Req. 2
Sales price per unit
$ 700.00
Job cost per unit ($1983 / 7, rounded to nearest cent)
(283.29)
Gross profit per unit
$ 416.71
Chapter 3 Job Costing
(10 min.) E3–37B
Req. 1
First, calculate the predetermined overhead rate:
Predetermined manufacturing
=
$348,950
overhead rate
9,970 direct labor hours
=
$35 per direct labor hour
Next, calculate the total job cost:
Direct materials
$ 25,400
Direct labor
(1,500 direct labor hours × $13 per direct labor hour)
19,500
Manufacturing overhead
(1,500 direct labor hours × $35 per direct hour)
52,500
Total job cost
$97,400
Total job cost
$97,400
30% markup
× 130%
Bid price
$126,620
or, alternatively:
Total job cost
$97,400
Add 30% markup on manufacturing cost
(30% × $97,400)
+ 29,220
Bid price
$126,620
Req. 2
First, calculate the predetermined overhead rate:
Predetermined manufacturing
=
$348,950
overhead rate
13,958 machine hours
=
$25 per machine hour
Next, calculate the total job cost:
Direct materials
$25,400
Direct labor
(1,500 direct labor hours × $13 per direct labor hour)
19,500
Manufacturing overhead
(2,000 machine hours × $25 per machine hour)
50,000
Total job cost
$94,900
Managerial Accounting 4e Solutions Manual
(continued) E3–37B
Then, compute bid price:
Total job cost
$ 94,900
30% markup
× 130%
Bid price
$123,370
Total manufacturing cost of job
$ 94,900
Add 30% markup on manufacturing cost
(30% × $94,900)
+ 28,470
Bid price
$123,370
(15-20 min.) E3–38B
Req. 1
Predetermined manufacturing overhead rate
=
$580,000
72,500 machine hours
=
$8 per machine hour
Req. 2
Allocated manufacturing overhead
=
57,000 machine hours ×
$8 per machine hour
=
$456,000
Chapter 3 Job Costing
(10-15 min.) E3–39B
Req. 1
Journal
DATE
ACCOUNTS
POST.
REF.
DEBIT
CREDIT
Manufacturing Overhead
$434,500
Accumulated Depreciation — plant and equipment
405,000
Property Tax Payable
21,500
Wages Payable
8,000
Req. 2
Note: Predetermined overhead rate $8
per MH
=
$580,000
72,500 machine hours
Journal Entry
DATE
ACCOUNTS
POST.
REF.
DEBIT
CREDIT
Work in Process Inventory
456,000
Manufacturing Overhead
456,000
To record manufacturing
overhead allocated
DATE
21,500
21,500
Managerial Accounting 4e Solutions Manual
(10 min.) E3-40B
Req. 1
Journal Entry
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
a.
Raw Materials Inventory
180,000
Accounts Payable
180,000
b.
Work in Process Inventory
158,000
Manufacturing Overhead
4,000
Raw Materials Inventory
162,000
c.
Work in Process Inventory
215,000
Manufacturing Overhead
25,000
Wages Payable
240,000
d.
Manufacturing Overhead
30,000
Accum. Depreciation
19,000
Utilities Payable (or A/P)
11,000
e.
Work in Process Inventory
56,000
Manufacturing Overhead
56,000
f.
Website Expense
4,000
Accounts Payable
4,000
Req. 2
During January, actual manufacturing overhead costs totaled $59,000 ($4,000 + $25,000 + $30,000). By the end of
January, a total of $56,000 had been allocated to jobs. Therefore, manufacturing overhead had been underallocated by
$3,000.
Chapter 3 Job Costing
(10 min.) E3–41B
1.
Direct materials used…………………
$ 28,500
2.
Indirect materials used………………
$ 6,500
3.
Direct labor………………………………
$ 64,000
4.
Indirect labor…………………………….
$ 10,000
5.
Cost of goods manufactured…………
$126,000
6.
Cost of goods sold……………………
$115,500
7.
Actual manufacturing overhead
($6,500 + $10,000 + $38,000)……….
$ 54,500
8.
Allocated manufacturing overhead….
$ 42,000
9.
Predetermined manufacturing
overhead rate, as a % of direct
labor cost; $42,000 / $64,000………… (rounded)
66%
10.
Manufacturing overhead is
($54,500 actual − $42,000 allocated) = $ 12,500 underallocated
Chapter 3 Job Costing
(10 min.) E3-43B
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
a.
Raw Materials Inventory
190,000
Accounts Payable
190,000
b.
Work in Process Inventory
152,000
Manufacturing Overhead
22,000
Raw Materials Inventory
174,000
c.
Work in Process Inventory
190,000
Manufacturing Overhead
35,000
Wages Payable
225,000
d.
Manufacturing Overhead
30,000
Accum. Depreciation
20,000
Utilities Payable (or A/P)
10,000
e.
Work in Process Inventory
81,000
Manufacturing Overhead
81,000
Req. 2
During January, actual manufacturing overhead costs totaled $87,000, while only $81,000 had been allocated to jobs.
Therefore, by the end of January, manufacturing overhead had been underallocated by $6,000.
Note: T-account not required.
Manufacturing Overhead
(Actual)
(Allocated)
(2) 22,000
(4) 35,000
(5) 30,000
(6) 81,000
6,000
Copyright © 2015 Pearson Education, Inc.
3-32
(25-30 min.) P3-44A
Req. 1
Estimated yearly overhead costs*
=
$173,000
Estimated yearly machine hours
6,920 machine hours
Predetermined overhead rate
=
$25 per machine hour
* $50,000 + $64,000 + $41,000 + $18,000 = $173,000
Req. 2
Actual machine hours…………………….
6,400
Predetermined overhead rate…………….
x $25 per machine hour
Manufacturing overhead allocated….…
$160,000
Req. 3
Manufacturing Overhead
Actual
Allocated
51,000
160,000
65,000
43,000
19,000
18,000
Journal Entry
DATE
ACCOUNTS
POST.
REF.
DEBIT
CREDIT
Cost of Goods Sold
13,000
Manufacturing Overhead
13,000
Req. 4
To help control manufacturing overhead, managers compare the actual line item amounts for manufacturing overhead
with the budgeted amounts. Managers also investigate only large differences between actual and budgeted amounts
to identify the reasons why actual costs differ from planned or budgeted costs.
(20-25 min.) P3-45A
Req. 1
Total estimated indirect costs
=
$823,400 *
Direct labor hours
17,900 direct labor hours
Predetermined Indirect Cost
Allocation Rate
=
$46 per direct labor hour
* $160,000 + $95,000 + $505,400 + $63,000 = $823,400
Chapter 3 Job Costing
(continued) P3-45A
Req. 2
Clark & Taylor
Estimated Cost of Jobs
GoVacation.com
Port Chance Golf
Resort
Direct Costs:
Direct labor
720 hr. x $ 100 per DL hr
$ 72,000
40 hr. x $ 100 per DL hr
$ 4,000
Software licensing costs
2,400
200
Travel
7,000
0
Total Direct Costs
$ 81,400
$ 4,200
Indirect Costs:
$ 46 per DL hr x 720 hr.
33,120
$ 46 per DL hr x 40 hr.
1,840
Total Cost
$ 114,520
$ 6,040
DL cost: $1,790,000 / 17,900 hours = $100 / hour.
Req. 3
Sales revenue − Total cost
=
Profit
Sales revenue − Total cost
=
0.20 × Sales revenue
0.80 × Sales revenue
=
Total cost
Sales revenue
=
Total cost
0.80
GoVacation.com:
Total job cost
$114,520
=
$ 143,150.
% of costs to revenue
0.80
Port Chance:
Total job cost
$ 6,040
=
$ 7,550.
% of costs to revenue
0.80
Req. 4
Clark & Taylor assigns costs to jobs to help the company set fees that cover all costs and contribute to profit. Assigning
costs to individual clients can also help the company control costs.
Managerial Accounting 4e Solutions Manual
(20-25 min.) P3-46A
Req. 1
Total estimated indirect costs
=
$ 315,000*
=
21%
Direct labor cost
$1,500,000
(30-35 min.) P3-47A
Req. 1
Job Cost Record
JOB NO. 298
CUSTOMER NAME AND ADDRESS ATV Corporation
JOB DESCRIPTION 170 TX tires
DATE PROMISED 10-10
DATE STARTED 9-30
DATE COMPLETED 10-3
DATE
DIRECT MATERIALS
DIRECT LABOR
MANUFACTURING OVERHEAD ALLOCATED
REQUISITION
NO.
AMOUNT
LABOR TIME RECORD
NO.
AMOUNT
DATE
RATE
AMOUNT
20
XX
9
30
437
$960
1896
$216
10
3
$22 per direct
10
2
439
400
labor houra
$924
3
501
1,200
1904
600
OVERALL COST SUMMARY
DIRECT MATERIALS.…………
$2,560
DIRECT LABOR…………………
816
MANUFACTURING OVERHEAD
ALLOCATED……
924
Totals
$2,560
$816
TOTAL JOB COST…….…..
$4,300
aPredetermined
=
$396,000
=
$22 per direct labor hour
mfg. overhead rate
18,000
Overhead allocated
=
(12 hrs + 30 hrs) × $22 per DL hour
=
$924
Managerial Accounting 4e Solutions Manual
(30-45 min.) P3-48A
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
a.
Raw Materials Inventory
470,000
Accounts Payable
470,000
b.
Work in Process Inventorya
83,200
Manufacturing Overhead
35,800
($119,000 – $83,200)
Wages Payable
119,000
c.
Work in Process Inventory
227,600
Raw Materials Inventoryb
227,600
d.
Manufacturing Overhead
6,300
Accum. Depr. — Equipment
6,300
e.
Manufacturing Overhead
14,100
Cash
10,100
Prepaid Insurance
4,000
f.
Work in Process Inventory
($83,200 × 0.60)
49,920
Manufacturing Overhead
49,920
a: $14,100 + $28,700 + $19,400 + $21,000
b: $41,900 + $56,600 + $62,200 + $66,900
Chapter 3 Job Costing
(continued) P3-48A
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
g.
Finished Goods Inventoryc
258,200
Work in Process Inventory
258,200
h.
Accounts Receivable ($99,000 + $146,000)
245,000
Sales Revenue
245,000
Cost of Goods Sold ($63,660 + $100,260)
164,960
Finished Goods Inventory
164,960
Work in Process Inventory
Finished Goods Inventory
(b)
83,200
(g)
258,200
(g)
258,200
(h)
164,960
(c)
227,600
(f)
49,920
Bal.
102,520
Bal.
93,240
Steinborn Homes
Reconciliation of Work in Process Inventory Subsidiary
and Control Accounts
Chalet #14
Unfinished chalet (#14):
Direct materials
$ 56,600
Direct labor
28,700
Manufacturing overhead (60% of labor) (28,700 x 0.6)
17,220
Total cost equals Work in Process balance
$102,520
Req. 4
Steinborn Homes
Reconciliation of Finished Goods Inventory Subsidiary
and Control Accounts
Chalet #15
Completed, unsold chalet (#15):
Direct materials
$62,200
Direct labor
19,400
Manufacturing overhead (60% of labor)
11,640
Total cost equals Finished Goods balance
$93,240