Five material requisitions (MR) forms were received by the materials storeroom of the Saint Louis
Foundry during the first week of 2017, as follows:
MR101 for direct materials for job number 1501 250$
MR102 for direct materials for job number 1502 350
MR103 for indirect materials issued to the factory floor 100
MR104 for direct materials for job number 1501 400
MR105 for direct materials for job number 1503 500
Required
Prepare summary journal entries to record the issuance of these materials.
DR CR
Exercise 2-7 Recording Material Cost in Job-Order Costing
Problem data follow:
MR101 for direct materials for job number 1501 250$
MR102 for direct materials for job number 1502 350
MR103 for indirect materials issued to the factory floor 100
MR104 for direct materials for job number 1501 400
MR105 for direct materials for job number 1503 500
Required
Prepare summary journal entries to record the issuance of these materials.
DR CR
Solution: Exercise 2-7 Recording Material Cost in Job-Order Costing
Johnson Products had the following labor time tickets for the month of February:
Ticket #
Job #
2101
201
2102
201
2103
201
2104
202
2105
203
Required
a. Calculate the amount of direct labor cost assigned to each job.
Job No.
Hours
Worked
Pay Rate
Labor
Cost
201 × =
201 × =
201 × =
Job No.
Hours
Worked
Pay Rate
Labor
Cost
202 × =
Job No.
Hours
Worked
Pay Rate
Labor
Cost
203 × =
b. Summarize the labor time tickets.
Job
Time Ticket
Hours Rate Cost
Total labor charges
Prepare a journal entry to record direct labor for the month.
DR CR
Employee #
Pay Rate
Hours Worked
Exercise 2-9 Recording Labor Cost in Job-Order Costing
011
$10.00
110
008
$21.00
90
011
$12.00
40
008
$20.00
50
008
$18.00
70
Johnson Products had the following labor time tickets for the month of February:
Ticket #
Job #
2101
201
2102
201
2103
201
2104
202
2105
203
Required
a. Calculate the amount of direct labor cost assigned to each job.
Job No.
Hours
Worked
Pay Rate
Labor
Cost
Job No.
Job No.
Hours
Labor
Hours
Labor
b. Summarize the labor time tickets.
Job
Time Ticket
Hours Rate Cost
201 2101 110 $10.00 1,100$
Prepare a journal entry to record direct labor for the month.
DR CR
Solution: Exercise 2-9 Recording Labor Cost in Job-Order Costing
Employee #
Pay Rate
Hours Worked
011
$10.00
110
008
$18.00
70
008
$20.00
50
008
$21.00
90
011
$12.00
40
Webber Fabricating estimated the following annual hours and costs:
Expected annual direct labor hours 40,000
Expected annual direct labor cost $625,000
Expected machine hours 20,000
Expected material cost for the year $800,000
Expected manufacturing overhead $1,000,000
Required
Direct labor hours
÷ = per
Direct labor cost
÷ = per
Machine hours
÷ = per
Direct material cost
÷ = per
Job 253 Direct materials 3,000$
Direct labor (150 hours @$12/hr)
1,800$
Machine hours used 150
Direct Labor
Hours
Direct materials
Direct labor
Manufacturing overhead
Total
What-if?
Consider the following after you have completed the requirements of E2-12.
1. Suppose management provides a revised manufacturing overhead estimate of $937,500.
What will be the revised cost of job 253 using direct labor cost is as the allocation base?
Exercise 2-12 Allocating Manufacturing Overhead to Jobs
a. Calculate predetermined overhead allocation rates using each of the four possible allocation
bases provided.
b. Determine the cost of the following job (number 253) using each of the four overhead
allocation rates.
Direct Labor
Cost
Machine Hours
Direct
Materials
÷ = per
Direct materials
Direct labor
Manufacturing overhead
Total
2. What effect will the overhead revision in part 1 have on profit of job 253?
Webber Fabricating estimated the following annual hours and costs:
Expected annual direct labor hours 40,000
Expected annual direct labor cost $625,000
Expected machine hours 20,000
Expected material cost for the year $800,000
Expected manufacturing overhead $1,000,000
Required
Direct labor hours
Job 253 Direct materials 3,000$
Direct labor (150 hours @$12/hr)
1,800$
Machine hours used 150
Direct Labor
Hours
What-if?
1. Suppose management provides a revised manufacturing overhead estimate of $937,500.
What will be the revised cost of job 253 using direct labor cost is as the allocation base?
Solution: Exercise 2-12 Allocating Manufacturing Overhead to Jobs
a. Calculate predetermined overhead allocation rates using each of the four possible allocation
bases provided.
b. Determine the cost of the following job (number 253) using each of the four overhead
allocation rates.
Direct Labor
Cost
Machine Hours
Direct
Materials
2. What effect will the overhead revision in part 1 have on profit of job 253?
Beginning balance in Work In Process Inventory 210,000$
Ending balance in Work In Process Inventory 300,000
Beginning balance in Finished Goods Inventory 500,000
Ending balance in Finished Goods Inventory 400,000
Direct material cost 2,500,000
Direct labor cost 3,000,000
Manufacturing overhead 1,700,000
Selling and administrative expenses 1,350,000
Sales 8,500,000
Required
a. Prepare a schedule of costs of goods manufactured.
Beginning balance in work in process inventory
Add current manufacturing costs:
Total
Less ending balance in work in process inventory
Cost of goods manufactured
b. Prepare an income statement for fiscal 2014. Ignore income taxes.
Sales
Less cost of goods sold:
Gross profit
Less nonmanufacturing expenses:
Net income (loss)
Satterfield’s Custom Glass
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2017
Problem 2-1 Cost of Goods Manufactured, Cost of Goods Sold, and Income
The following information is available for Satterfield’s Custom Glass for the fiscal year ending
December 31, 2017:
Satterfield’s Custom Glass
Income Statement
For the Year Ended December 31, 2017
Beginning balance in Work In Process Inventory 210,000$
Ending balance in Work In Process Inventory 300,000
Beginning balance in Finished Goods Inventory 500,000
Ending balance in Finished Goods Inventory 400,000
Direct material cost 2,500,000
Direct labor cost 3,000,000
Manufacturing overhead 1,700,000
Selling and administrative expenses 1,350,000
Sales 8,500,000
Required
a. Prepare a schedule of costs of goods manufactured.
Beginning balance in work in process inventory 210,000$
Add current manufacturing costs:
b. Prepare an income statement for fiscal 2014. Ignore income taxes.
Solution: Problem 2-1 Cost of Goods Manufactured, Cost of Goods Sold, and Income
Income Statement
For the Year Ended December 31, 2017
Satterfield’s Custom Glass
Schedule of Cost of Goods Manufactured
The following information is available for Satterfield’s Custom Glass for the fiscal year ending
December 31, 2017:
Satterfield’s Custom Glass
For the Year Ended December 31, 2017
=> Smith Die purchased steel on account from Eastern City Steel 5,500$
=> The company received and paid for supplies (indirect materials) from
Mallard Supply 2,400$
Job Number
Direct
Materials
Indirect
Materials
Direct Labor
Indirect
Labor
1005 $650 $1,600
1006 850 2,000
1007 1,550 3,300
1008 650 1,400
1009 450 900
1010 350 700
Totals $4,500 $1,000 $9,900 $6,500
=> Overhead was applied to all jobs in process based on direct labor cost 180%
=> Jobs 1005, 1006, 1007, and 1008 were completed and transferred to finished goods.
=> Jobs 1005, 1006, 1007 and 1008 were shipped to customers and billed at 150%
of total job costs.
Required
a. Calculate the total cost of each job.
1005 1006 1007 1008 1009 1010
Direct material
Direct labor
Mfg. overhead
b. Prepare journal entries to record the above information.
DR CR
To record the purchase of steel
To record the purchase of supplies
To record materials used in production
Smith Die Company manufactures cutting dies for the shoe industry. Each set of dies is custom
designed to a customer’s templates. During the first week of May, six orders were received from
customers. They were assigned job numbers 1005-1010. The following transactions occurred during
the first week of May.
Problem 2-3 Job-Order Costing: Inventory Accounts and Cost of Goods Sold
=> Material requisitions indicated that materials were issued to the factory floor and
To record labor
To record overhead applied to production
To record the cost of jobs completed
To record the sale of finished goods
What-if?
Consider the following after you have completed the requirements of P2-3.
Total
The production manager has asked what inventory amounts exist at the end of the first week of May.
Calculate the amounts.
Relevant problem data follow:
=> Smith Die purchased steel on account from Eastern City Steel 5,500$
=> The company received and paid for supplies (indirect materials) from
Mallard Supply 2,400$
Job Number
Direct
Materials
Indirect
Materials
Direct Labor
Indirect
Labor
1005 $650 $1,600
1006 850 2,000
1007 1,550 3,300
1008 650 1,400
1009 450 900
1010 350 700
Totals $4,500 $1,000 $9,900 $6,500
=> Overhead was applied to all jobs in process based on direct labor cost 180%
=> Jobs 1005, 1006, 1007, and 1008 were completed and transferred to finished goods.
=> Jobs 1005, 1006, 1007 and 1008 were shipped to customers and billed at 150%
of total job costs.
Required
a. Calculate the total cost of each job.
1005 1006 1007 1008 1009 1010
b. Prepare journal entries to record the above information.
Solution: Problem 2-3 Job-Order Costing: Inventory Accounts and Cost of Goods Sold
=> Material requisitions indicated that materials were issued to the factory floor
and labor time ticket summaries were prepared for the week as follows:
What-if?