Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
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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
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)
to Factory Overhead for indirect materials, and a credit (decrease) to Raw Materials
Inventory.
6. The materials requisition slip is designed to track the movement of materials from
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
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,
such as indirect materials, indirect labor, factory rent, and factory insurance. Credits
9. Assuming that the overapplied or underapplied overhead is immaterial, it is closed to
the Cost of Goods Sold account.
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 estimated overhead costs must be applied
to products during the current period. (2) A predetermined rate is used to spread
indirect costs to products and/or services throughout an accounting period, where
12. Each patient in a hospital can be viewed as a “job.” In this case, a job order cost
sheet would be used to capture cost of direct materials (supplies, medicine, and so
forth), direct labor, and hospital overhead.
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. materials,
labor, and overhead) used on each job. Managers can use this job cost information
to monitor whether Sprint is meeting its target costs and producing reasonable
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
QUICK STUDIES
Quick Study 15-1 (5 minutes)
Quick Study 15-2 (10 minutes)
Finished Goods Inventory ……………………………………..
10,500
Work in Process Inventory …………………………..
10,500
10,500
Finished Goods Inventory …………………………..
10,500
14,900
Sales ……………………………………………………….
14,900
Quick Study 15-3 (10 minutes)
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Quick Study 15-4 (15 minutes)
Raw Materials Inventory ………………………………………..
50,000
Cash ………………………………………………………………..
50,000
12,000
Raw Materials Inventory …………………………………..
12,000
32,000
Raw Materials Inventory …………………………………..
32,000
Quick Study 15-5 (10 minutes)
Work in Process Inventory …………………………………….
140,000
Factory Wages Payable ……………………………………
40,000
Factory Wages Payable ……………………………………
Quick Study 15-6 (10 minutes)
1. Factory overhead, $117,000 / Direct labor, $468,000 = 25%
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
Quick Study 15-7 (10 minutes)
Quick Study 15-8 (5 minutes)
Quick Study 15-9 (10 minutes)
Overhead Applied
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Quick Study 15-10 (10 minutes)
1.
JOB COST SHEET
Job 1
Direct materials ……………………………………………………….
Direct labor …………………………………………………………………….
$ 5,000
9,000
Factory overhead (From QS 15-9) …………………………..
2,000
Total ……………………………………………………………………………..
$16,000
JOB COST SHEET
Job 2
Direct labor …………………………………………………………………….
4,000
Factory overhead (From QS 15-9) …………………………..
2,800
Total ……………………………………………………………………………..
$13,800
Direct materials ……………………………………………………….
$ 7,000
JOB COST SHEET
Job 3
Factory overhead (From QS 15-9) …………………………..
Total ……………………………………………………………………………..
Direct materials ……………………………………………………….
$1,500
2. The balance in the Work in the Process Inventory account equals
3. The balance in the Finished Goods Inventory account equals $13,800,
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
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Quick Study 15-11 (15 minutes)
Cost of Goods Sold ……………………………………………….
50,000
Quick Study 15–12 (5 minutes)
Factory Overhead ………………………………………………….
22,000
Quick Study 15-13 (10 minutes)
JOB COST SHEET
Direct labor ($50 x 200) ………………………………………………….
$10,000
Factory overhead ($65 x 200) ……………………………………………
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Quick Study 15-14 (10 minutes)
Services in Process Inventory* …………………………..
3,250
Service Wages Payable …………………………………….
3,250
Services in Process Inventory** …………………………..
2,600
Factory Overhead …………………………………………….
Quick Study 15-15 (5 minutes)
JOB COST SHEET
Direct materials ……………………………………………………….
$ 600
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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
Direct labor
W-3393 …………………………………….
W-3479 …………………………………….
W-3559 …………………………………….
Overhead ($1,350 X 110%) …………….
Total cost ……………………………………
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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 ……………………………………………………
Job 103 ……………………………………………………
Job 104 ……………………………………………………
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
$ 6,200
Job 103 ……………………………………………………….
Job 104 ……………………………………………………….
3. The predetermined overhead rate equals the ratio of the amount of
overhead assigned to jobs divided by the amount of direct labor cost
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
Overhead ……………………………………
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Exercise 15-4 (15 minutes)
1.
Raw Materials Inventory …………………………………………
76,200
2.
Work in Process Inventory ……………………………………..
48,000
3.
Work in Process Inventory ……………………………………..
15,350
15,350
4.
Work in Process Inventory ……………………………………..
18,420
18,420
Exercise 15-5 (20 minutes)
1.
a.
Work in Process Inventory ……………………………………..
9,500
Raw Materials Inventory ……………………………………
9,500
Record direct materials used.
b.
Work in Process Inventory ……………………………………..
8,000
Factory Wages Payable …………………………………….
8,000
Record direct labor used.
c.
Work in Process Inventory ……………………………………..
6,400
Factory Overhead ……………………………………………..
6,400
d.
Finished Goods Inventory …………………………..
Accounts Receivable ……………………………………………..
Sales ………………………………………………………………..
2. The balance in Work in Process Inventory at the end of July ($6,280)
equals the total cost reported on the job cost sheet for Job 122, the
only job still in process at the end of the month. The balance in
Finished Goods Inventory ($12,660) equals the total cost reported on
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Exercise 15-6 (25 minutes)
a.
Raw Materials Inventory …………………………………………
90,000
Accounts Payable …………………………………………….
90,000
Record materials purchases.
b.
Work in Process Inventory ……………………………………..
36,500
Raw Materials Inventory ……………………………………
36,500
Assign costs of direct materials used.
Factory Overhead …………………………………………………..
19,200
Raw Materials Inventory ……………………………………
19,200
Record indirect materials.
c.
Work in Process Inventory ……………………………………..
38,000
Record payroll costs paid.
d.
Factory Overhead …………………………………………………..
11,475
Cash ………………………………………………………………..
11,475
Record other factory overhead paid.
e.
Work in Process Inventory ……………………………………..
47,500
Factory Overhead ……………………………………………..
47,500
Finished Goods Inventory ………………………………………
56,800
Work in Process Inventory …………………………..
56,800
g.
56,800
Finished Goods Inventory …………………………..
56,800
Accounts Receivable ……………………………………………..
82,000
Sales ………………………………………………………………..
82,000
Apply overhead to jobs at the rate of 125% of
direct labor cost.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
Exercise 15-7 (30 minutes)
1.
Cost of direct materials used
Beginning raw materials inventory……………………………………………
$ 43,000
Plus purchases ………………………………………………………………………..
210,000
Raw materials available …………………………..…………………………..
253,000
Less ending raw materials inventory ………………………………………..
Total raw materials used …………………………..…………………………..
201,000
Less indirect materials used …………………………..………………………..
Cost of direct materials used ……………………………………………………
$186,000
2.
Cost of direct labor used
Total factory payroll …………………………..…………………………..
$345,000
Less indirect labor …………………………..…………………………..
Cost of direct labor used ……………………………………………………….
$265,000
3.
Cost of goods manufactured
Beginning work in process inventory ……………………………………….
$ 10,200
Plus direct materials ……………………………………………………….
186,000
Plus direct labor ………………………………………………………………………
265,000
Plus overhead applied (70% of direct labor cost) …………………………
Total cost of work in process ……………………………………………………
646,700
Less ending work in process inventory …………………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
Exercise 15–7 (continued)
4.
Cost of goods sold
Beginning finished goods inventory …………………………………………
$ 63,000
Plus cost of goods manufactured …………………………………………….
625,400
Less ending finished goods inventory…………………………..
Cost of goods sold ……………………………………………………….
$ 652,800
5.
Gross profit
Cost of goods sold ……………………………………………………….
Gross profit ……………………………………………………………………………..
$ 747,200
6.
Actual overhead incurred
Indirect materials ……………………………………………………………………..
$ 15,000
Indirect labor ……………………………………………………………………………
80,000
Other overhead costs ……………………………………………………….
120,000
Total actual overhead incurred …………………………………………………
215,000
Overhead applied …………………………………………………………………….
185,500
Underapplied overhead ……………………………………………………….
$ 29,500
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
Exercise 15-8 (10 minutes)
1.
Raw Materials Inventory …………………………..
210,000
Cash ……………………………………………………….
210,000
2.
Work in Process Inventory …………………………..
186,000
Raw Materials Inventory …………………………..
186,000
3.
Factory Overhead …………………………………………………..
15,000
Raw Materials Inventory …………………………..
15,000
Exercise 15-9 (10 minutes)
1.
Work in Process Inventory …………………………..
265,000
Factory Wages Payable …………………………..
265,000
2.
Factory Overhead …………………………………………………..
80,000
Factory Wages Payable …………………………..
80,000
3.
Factory Wages Payable …………………………..
345,000
Cash ……………………………………………………….
345,000
Exercise 15-10 (10 minutes)
1.
Factory Overhead …………………………………………………..
120,000
Other Accounts ………………………………………………..
120,000
2.
Work in Process Inventory …………………………..
185,500
Factory Overhead …………………………..…………………
185,500
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Exercise 15–11 (15 minutes)
1.
2.
Direct materials ……………………………………………………………………….
$15,350
Total cost of Job No. 13-56 ………………………………………………………
$22,710
Exercise 15–12 (20 minutes)
2.
Total cost of job in process (given) ………………………………………………
$ 50,000
Less materials cost of job in process (given) …………………………..
Less overhead applied (30,000 x 40%) …………………………………………..
Exercise 15-13 (10 minutes)
Actual OH 215,000 OH applied 185,500
Factory Overhead
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Exercise 15-14 (15 minutes)
Indirect materials 22,000
Factory Overhead – Storm
Factory Overhead …………………………………………………..
3,200
Cost of Goods Sold …………………………………………..
3,200
Close overapplied overhead for Storm.
Factory Overhead …………………………..…………………
Indirect materials 12,500
Factory Overhead – Valle
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
Exercise 15-15 (35 minutes)
1.
Predetermined overhead rate
2. & 3.
Factory Overhead
Underapplied …………….
4.
Dec. 31
Cost of Goods Sold ………………………………………………..
8,000
Factory Overhead ……………………………………………..
8,000
Close underapplied overhead.
Exercise 15-16 (25 minutes)
1.
Predetermined overhead rate
2. & 3.
Overhead
4.
Dec. 31
Factory Overhead …………………………………………………..
10,500
Cost of Goods Sold …………………………………………..
Close overapplied overhead.
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Exercise 15-17 (30 minutes)
2.
Total cost of work in process inventory …………………………..
$ 71,000
Direct materials ………………………………………………………………
Exercise 15-18 (35 minutes)
1. Estimated cost of the architectural job
Labor type
Estimated
hours
Hourly rate
Total cost
Architects …………………………..
Total labor cost……………………………………………………………….
Overhead applied 175% of direct labor cost …………………….
Total estimated cost……………………………………………………….
3. Frey’s price to cover both its costs and desired profit is:
Total estimated cost ……………………………………………………….
$213,125
Desired profit ………………………………………………………………….
80,000