1. a. Job order cost system and process cost system.
2. Job order costing is used by firms that sell custom goods and services to customers. The job
4. a. Purchase invoice or receiving report
b. Materials requisition
5. A job cost sheet is the subsidiary ledger to the work in process control account. The cost of
7. The predetermined overhead rate is computed using estimated amounts at the beginning of the
p
eriod. This is because managers need timely information on the product costs of each job. If
8. a. The predetermined factory overhead rate is determined by dividing the estimated total factory
9. a. (1) If the amount of factory overhead applied is greater than the actual factory overhead
incurred, factory overhead is overapplied.
(2) If the amount of actual factory overhead is greater than the amount applied, factory
CHAPTER 17 (FINMAN); CHAPTER 2 (MAN)
JOB ORDER COSTING
DISCUSSION QUESTIONS
p
DISCUSSION QUESTIONS (Continued)
10. Job order cost accumulation would be most appropriate for professional service firms that
p
rovide extended, project-type services for clients. Examples would be architectural,
17-2
PE 17–1A (FIN MAN); PE 2–1A (MAN)
8 Materials 576,000
PE 17–1B (FIN MAN); PE 2–1B (MAN)
4 Materials 168,000
Accounts Payable 168,000
PE 17–2A (FIN MAN); PE 2–2A (MAN)
Work in Process* 837,000
PE 17–2B (FIN MAN); PE 2–2B (MAN)
Work in Process* 186,200
Aug.
PRACTICE EXERCISES
Feb.
17-3
PE 17–3A (FIN MAN); PE 2–3A (MAN)
Factory Overhead 186,000
PE 17–3B (FIN MAN); PE 2–3B (MAN)
Factory Overhead 66,600
PE 17–4A (FIN MAN); PE 2–4A (MAN)
PE 17–4B (FIN MAN); PE 2–4B (MAN)
17-4
PE 17–5A (FIN MAN); PE 2–5A (MAN)
a. Job 60 Job 61
PE 17–5B (FIN MAN); PE 2–5B (MAN)
a. Job 40 Job 42
PE 17–6A (FIN MAN); PE 2–6A (MAN)
PE 17–6B (FIN MAN); PE 2–6B (MAN)
17-5
Ex. 17–1 (FIN MAN); Ex. 2–1 (MAN)
a. Materials requisitioned for use (both direct and indirect).
Ex. 17–2 (FIN MAN); Ex. 2–2 (MAN)
a. Cost of goods sold:
b. Direct materials cost:
c. Direct labor cost:
EXERCISES
17-6
Ex. 17–3 (FIN MAN); Ex. 2–3 (MAN)
a.
Materials
Receiving Requi-
Report Unit sition Unit
Number Quantity Price Number Quantity Amount Quantity Price Amount
July 1 300 $18.00 $5,400
b. Ending wire cable balance:
120 at $32.00……………………………………………………………………
…
Ex. 17–4 (FIN MAN); Ex. 2–4 (MAN)
Work in Process
BALANCE
Date
RECEIVED ISSUED
155,050
$3,840
17-7
Ex. 17–5 (FIN MAN); Ex. 2–5 (MAN)
a. Materials* 1,471,540
Accounts Payable 1,471,540
c. Polyester
Fabric Filling Lumber Glue
Balance, May 1………………………
…
$ 56,000 $ 16,800 $ 125,300 $ 5,460
Ex. 17–6 (FIN MAN); Ex. 2–6 (MAN)
Work in Process 69,960
17-8
Ex. 17–7 (FIN MAN); Ex. 2–7 (MAN)
a. Work in Process 3,815
Supporting Calculations:
Direct
Labor
Hourly Job Job Job (sum of Indirect
Rate 501 502 503 job costs) Labor
Ex. 17–8 (FIN MAN); Ex. 2–8 (MAN)
a. Work in Process 22,600
Labor Costs (Hourly Rate × Hours)
17-9
Ex. 17–9 (FIN MAN); Ex. 2–9 (MAN)
c. Factory 1:
Work in Process 73,200
Ex. 17–10 (FIN MAN); Ex. 2–10 (MAN)
The estimated shop overhead is determined as follows:
The engine parts and shop labor are direct to the jobs and are not included in the
shop overhead rate. The advertising and administrative expenses are selling and
administrative expenses that are not included in the shop overhead but are
treated as period expenses.
17-10
Ex. 17–11 (FIN MAN); Ex. 2–11 (MAN)
a. Estimated annual operating room overhead: $873,600
Estimated operating room activity base, number of operating room hours:
Hours per day………………………………………………………
…
8
b. Wayne Lawrence’s procedure:
…
17-11
Ex. 17–12 (FIN MAN); Ex. 2–12 (MAN)
b. Cost of unfinished jobs at June 30:
Ex. 17–13 (FIN MAN); Ex. 2–13 (MAN)
a. Work in Process 25,990
d. Finished Goods* 22,580
17-12
Ex. 17–14 (FIN MAN); Ex. 2–14 (MAN)
a.
Revenues $1,125,000
b. Materials inventory:
Purchased materials…………………………………………………………… $320,000
Work in process inventory:
KIRCHHOFF INC.
Income Statement
For the Month Ended April 30, 2014
17-13
Ex. 17–15 (FIN MAN); Ex. 2–15 (MAN)
a. Unit
Date Job. No. Quantity Product Amount Cost
Jan. 2 1 520 TT $16,120 $31.00
Jan. 15 22 1,610 SS 20,125 $12.50
Unit Costs for TT
30
40
1 416592
Job Number
Unit Costs for SS
—
2
4
6
8
22 30 82
Job Number
Unit Cost
Unit Costs for SLK
—
2
4
6
20
22
Unit Cost
17-14
Ex. 17–15 (FIN MAN); Ex. 2–15 (MAN) (Concluded)
As can be seen, the unit costs behave differently for each product. SLK has
17-15
Ex. 17–16 (FIN MAN); Ex. 2–16 (MAN)
a. The first item to note is that the cost did not go up due to any increases in the
cost of labor or materials. Rather, the cost of the plaques increased because
Job 105 used more labor and materials per unit than did Job 101. Specifically,
Brass plates:
Actual units used 40 units
Labor
Engraving:
Actual labor hours used 20 hours
Assembly:
Actual labor hours used 10 hours
17-16
Ex. 17–16 (FIN MAN); Ex. 2–16 (MAN) (Concluded)
Job 105:
Materials
Walnut plaques:
Actual units used 34 units
Labor
Engraving:
Actual labor hours used 17 hours
Expected labor hours to produce 30 plaques 15 hours
b. Apparently, the engraving and assembly work is becoming sloppy. Job 105
required 34 engraved brass plates in order to get 30 with acceptable quality. It
is likely that the engraver is not being careful in correctly spelling the names.
17-17
Ex. 17–17 (FIN MAN); Ex. 2–17 (MAN)
a. May 2 Work in Process (200 hrs. × $140) 28,000
Salaries Payable 28,000
7 Work in Process 14,600
31 Salaries Payable 38,640
Cash 38,640
b. Office overhead incurred ($26,000 + $6,000)………………
…
$32,000
Office overhead applied………………………………………… 25,000
17-18
Ex. 17–18 (FIN MAN); Ex. 2–18 (MAN)
a. Work in Process 711,000
Salaries Payable
b. Work in Process 1,420,000
711,000
17-19
Prob. 17–1A (FIN MAN); Prob. 2–1A (MAN)
a. Materials 528,000
Accounts Payable 528,000
e. Factory Overhead 24,360
Selling Expenses 20,600
Administrative Expenses 14,900
Prepaid Expenses 59,860
PROBLEMS
17-20