CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN)
JOB ORDER COSTING
DISCUSSION QUESTIONS
1. a. Job order cost system and process cost system.
b. The job order cost system provides a separate record of each quantity of product that passes
through the factory.
c. Process cost systems accumulate costs for each department or process within a factory.
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 materials,
labor, and overhead are listed on each separate job cost sheet for each job. A summary of all the job
cost sheets during an accounting period is the basis for journal entries to the control accounts.
8. a. The predetermined factory overhead rate is determined by dividing the estimated total factory
overhead costs for the forthcoming year by an estimated activity base, one that reflects the
consumption or use of factory overhead costs.
b. Direct labor cost, direct labor hours, and machine hours.
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
DISCUSSION QUESTIONS (Continued)
10. Job order cost accumulation would be most appropriate for professional service firms that provide
extended, project-type services for clients. Examples would be architectural, consulting, advertising,
or legal services. Job cost sheets would accumulate all direct costs of servicing the client. Such costs
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
BASIC EXERCISES
BE 16–1 (FIN MAN); BE 2–1 (MAN)
May
7
Materials
80,000
Accounts Payable
80,000
May
67,400
BE 16–2 (FIN MAN); BE 2–2 (MAN)
142,000
142,000
BE 16–3 (FIN MAN); BE 2–3 (MAN)
Factory Overhead
29,200
Materials
8,800
Accumulated Depreciation—Factory
9,000
BE 16–4 (FIN MAN); BE 2–4 (MAN)
a. $7.75 per direct labor hour = $620,000 ÷ 80,000 direct labor hours
c.
Work in Process
42,625
Factory Overhead
42,625
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
BE 16–5 (FIN MAN); BE 2–5 (MAN)
a.
Job 200
Job 305
Direct materials ………………………………………………………………….
$ 60,000
$ 7,400
Direct labor ………………………………………………………………………..
70,000
72,000
Factory overhead ………………………………………………………………..
19,375
23,250
Total costs …………………………………………………………………..
$102,650
Job 200
$62.50 = $149,375 ÷ 2,390 units
Job 305
$50.00 = $102,650 ÷ 2,053 units
BE 16–6 (FIN MAN); BE 2–6 (MAN)
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
EXERCISES
Ex. 16–1 (FIN MAN); Ex. 2–1 (MAN)
a. Materials requisitioned for use (both direct and indirect)
Ex. 16–2 (FIN MAN); Ex. 2–2 (MAN)
a. Cost of goods sold:
Sales ……………………………………………………………………………. $12,375,000
b. Direct materials cost:
Materials purchased ……………………………………………………… $4,125,000
c. Direct labor cost:
Total manufacturing costs for the period ……………………….. $ 7,880,000
Less: Direct materials cost …………………………………………. $3,655,000
Factory overhead* …………………………………………….. 1,400,000 (5,055,000)
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–3 (FIN MAN); Ex. 2–3 (MAN)
a.
RECEIVED
ISSUED
BALANCE
Receiving
Report
Number
Quantity
Unit Price
Materials
Requisition
Number
Quantity
Amount
Date
Quantity
Unit
Price
Amount
May 1
285
$30.00
$8,550
40
130
$32
May 4
285
$30.00
8,550
4,160
44
110
May 21
$32.00
1,600
110
$38.00
4,180
2,280
* May 10 issuance
285 at $30.00
$ 8,550
80 at $32.00
2,560
$11,110
50 at $38.00
$ 3,500
b. Ending inventory balance:
60 at $38.00 ………………………………………………………………………………. $2,280
c.
Work in Process ($11,110 + $3,500)
14,610
Materials
14,610
Ex. 16–4 (FIN MAN); Ex. 2–4 (MAN)
Factory Overhead
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–5 (FIN MAN); Ex. 2–5 (MAN)
a.
Materials*
1,770,000
Accounts Payable
1,770,000
* $820,000 + $315,000 + $555,000 + $80,000
b.
Work in Process*
1,664,000
Factory Overhead
Materials
1,747,600
c.
Fabric
Polyester
Filling
Lumber
Glue
Balance, April 1 …………………………….
$ 58,300
$ 30,000
$ 58,800
$ 9,950
April purchases …………………………….
April requisitions …………………………..
(810,000)
(83,600)
Balance, April 30…………………………..
Ex. 16–6 (FIN MAN); Ex. 2–6 (MAN)
Work in Process
85,755
Factory Overhead
8,220
Wages Payable
93,975
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–7 (FIN MAN); Ex. 2–7 (MAN)
a.
Work in Process
Supporting calculations:
Labor Costs (Hourly Rate × Hours)
Hourly
Rate
Job
301
Job
302
Job
303
Direct Labor
(sum of job
costs)
Indirect
Labor
David Clancy ……………….
Jose Cano ……………………
1,092
$3,676
$164
b. The direct labor costs for the completed jobs would become part of the finished goods
inventory. The direct labor costs for Job 303 would remain part of the work in process
inventory.
Ex. 16–8 (FIN MAN); Ex. 2–8 (MAN)
a.
Work in Process
47,792
Factory Overhead
12,500
60,292
b.
Work in Process
37,904
Factory Overhead
37,904
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–9 (FIN MAN); Ex. 2–9 (MAN)
a. Factory 1: $14.80 per machine hour ($18,500,000 ÷ 1,250,000 machine hours)
Factory Overhead
1,554,000
($14.80 × 105,000).
Factory 2:
Work in Process
3,547,500
Factory Overhead
3,547,500
($55.00 × 64,500).
d. Factory 1—$38,200 credit (overapplied) ($1,515,800 – $1,554,000)
Factory 2—$58,800 debit (underapplied) ($3,606,300 – $3,547,500)
Ex. 16–10 (FIN MAN); Ex. 2–10 (MAN)
The estimated shop overhead is determined as follows:
Shop and repair equipment depreciation ……………………………………….. $ 62,500
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.
The estimated activity base is determined by dividing the shop direct labor cost by the direct
labor rate, as follows:
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–11 (FIN MAN); Ex. 2–11 (MAN)
a. Estimated annual operating room overhead: $812,000
Estimated operating room activity base, number of operating room hours:
Predetermined surgical overhead rate:
$812,000 $290 per hour
2,800 hours =
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–12 (FIN MAN); Ex. 2–12 (MAN)
a.
Finished Goods*
560,240
Work in Process
560,240
* $182,500 + $78,300 + $232,190 + $67,250
b.
Work in process inventory, January 1 ……………………………….
Direct labor ……………………………………………………………………..
Factory overhead …………………………………………………………….
Total manufacturing costs………………………………………………..
Jobs finished during January …………………………………………..
Work in process inventory, January 31 ……………………………..
$ 85,800
Ex. 16–13 (FIN MAN); Ex. 2–13 (MAN)
a.
Work in Process
55,500
Factory Overhead
4,500
Materials
60,000
Work in Process
106,800
Factory Overhead
8,200
Wages Payable
115,000
c.
Work in Process
26,700
Factory Overhead
26,700*
Predetermined overhead rate:
Job 301: $7,750 ÷ $31,000 = 25% or
Job 302: $10,550 ÷ $42,200 = 25%
Finished Goods*
122,750
Work in Process
122,750
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–14 (FIN MAN); Ex. 2–14 (MAN)
a.
Rushmore Biking Inc.
Income Statement
For the Month Ended February 28
Revenues
$ 910,000
Cost of goods sold
(550,000)
Gross profit
$ 360,000
Total selling and administrative expenses
(275,000)
Operating income
$ 85,000
b. Materials inventory:
Work in process inventory:
Materials used in production ………………………………………………………….. $ 434,500
Finished goods inventory:
Transferred to finished goods…………………………………………………………. $ 578,000
Less: Cost of goods sold ……………………………………………………………….. (550,000)
Finished goods inventory, February 28 ……………………………………………. $ 28,000
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–15 (FIN MAN); Ex. 2–15 (MAN)
a.
July
3
Work in Process (175 hrs. × $150)
26,250
Salaries Payable
26,250
10
Work in Process
12,500
Cash
12,500
14
Work in Process (260 hrs. × $185)
48,100
48,100
18
Work in Process
30,000
30,000
27
Work in Process (435 hrs. × $62)
26,970
Office Overhead
26,970
31
Office Overhead
28,500
Cash
28,500
31
Office Overhead
4,000
Supplies
4,000
31
Salaries Payable
74,350
74,350
31
Accounts Receivable
31
Cost of Services
Work in Process*
* $26,250 + $12,500 + $48,100 + $30,000 + $26,970
b.
Office overhead incurred ($28,500 + $4,000)
$ 32,500
Office overhead applied
(26,970)
Underapplied overhead
$ 5,530
Fees earned
Cost of services*
Gross profit
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Ex. 16–16 (FIN MAN); Ex. 2–16 (MAN)
a.
Work in Process
1,068,000
Salaries Payable
1,068,000
Work in Process
2,130,000
Accounts Payable
2,130,000
Work in Process (65% × $2,130,000)
1,384,500
Agency Overhead
1,384,500
d.
Cost of Services
2,827,750
Work in Process
2,827,750
Cost of completed jobs, $2,827,750:
Vault
Bank
Take Off
Airlines
August 1 balance ………………………………………………..
$ 270,000
$ 80,000
625,000
Total costs ………………………………………………………….
$1,631,500
$1,196,250
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
PROBLEMS
Prob. 16–1A (FIN MAN); Prob. 2–1A (MAN)
a.
Materials
315,500
Accounts Payable
315,500
b.
Work in Process
281,950
Factory Overhead
Materials
290,100
c.
Work in Process
455,300
Factory Overhead
Wages Payable
489,500
d.
Factory Overhead
600,000
Selling Expenses
150,000
Administrative Expenses
100,000
Accounts Payable
850,000
e.
Factory Overhead
Selling Expenses
Administrative Expenses
Prepaid Expenses
Depreciation Expense—Office Equipment
Factory Overhead
Accum. Depr.—Buildings and Equipment
g.
Work in Process
711,660
Factory Overhead
711,660
h.
Finished Goods
1,425,000
Work in Process
1,425,000
i.
Cost of Goods Sold
1,380,000
Finished Goods
1,380,000
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Prob. 16–2A (FIN MAN); Prob. 2–2A (MAN)
1.
a.
Materials
45,000
Accounts Payable
45,000
Work in Process
41,595
Factory Overhead
Materials
16,200
Wages Payable
31,595
c.
Factory Overhead
1,800
Accounts Payable
1,800
d.
Factory Overhead
2,500
Accumulated Depreciation—Machinery
2,500
e.
Work in Process
9,000
Factory Overhead (300 hours × $30)
9,000
f.
Finished Goods
38,755
Work in Process
38,755
Computation of cost of jobs finished:
Job
Direct
Materials
Direct
Labor
Factory
Overhead
Total
No. 301 ……….
$1,850
$2,500
$ 900
$ 5,250
No. 302 ……….
No. 303 ……….
No. 305 ……….
12,555
Total …………………………………………………………….
$38,755
g.
Accounts Receivable
38,050
Sales
38,050
Cost of Goods Sold
26,200
Finished Goods
26,200
Computation of cost of jobs sold:
Job
No. 301 ………………………………………………..
$ 5,250
No. 302 ………………………………………………..
No. 303 ………………………………………………..
8,780
Total ……………………………………………………
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Prob. 16–2A (FIN MAN); Prob. 2–2A (MAN) (Concluded)
2.
Work in Process
Finished Goods
(b)
41,595
(f)
38,755
(f)
38,755
(g)
26,200
(e)
9,000
_________
__________
__________
Bal.
11,840
Bal.
12,555
3. Schedule of unfinished jobs:
No. 304
$ 6,090
No. 306
Balance of Work in
4. Schedule of completed jobs:
Finished Goods, March 31
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Prob. 16–3A (FIN MAN); Prob. 2–3A (MAN)
1. and 2.
JOB COST SHEET
Customer Jackson Consulting Date
Date wanted
Date completed
Job. No.
October 1
October 10
October 10
ESTIMATE
Direct Materials
Direct Labor
Summary
200 meters at $35
Amount
16 hours at $20
Amount
Direct materials
Total
Total
Total cost
Amount
7,000
320
7,000
Direct Materials
Direct Labor
Summary
Mat.
Req.
No.
Description
Amount
Time
Ticket
No.
Descrip-
tion
Amount
Item
Amount
112
140 meters
at $35
4,900
H10
10 hours
at $20
200
Direct materials
7,280
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Prob. 16–4A (FIN MAN); Prob. 2–4A (MAN)
1. Supporting calculations:
Job. No.
Quantity
June 1
Work in
Process
Direct
Materials
Direct
Labor
Factory
Overhead
Total Cost
Unit
Cost
Units
Sold
Cost of
Goods
Sold
No. 201
550
$16,500
$ 55,000
$ 41,250
$ 57,750
$ 170,500
$310.00
440
$136,400
No. 202
1,100
44,000
93,500
71,500
100,100
309,100
281.00
880
247,280
No. 204
660
82,500
69,300
97,020
248,820
377.00
570
214,890
No. 205
480
60,000
48,000
67,200
175,200
365.00
420
153,300
No. 206
380
22,000
12,400
17,360
51,760
a. $395,500. Materials applied to production in June + indirect materials.
($351,500 + $44,000)
b. $60,500. From table above and problem.
c. $351,500. From table above.
d. $264,450. From table above.
CHAPTER 16 (FIN MAN); CHAPTER 2 (MAN) Job Order Costing
Prob. 16–4A (FIN MAN); Prob. 2–4A (MAN) (Concluded)
2. June 30 balances:
Materials …………………….. $ 17,000 ($82,500 + $330,000 – $395,500)
$237,500 – $370,230)
* $60,500 + $351,500 + $264,450 + $370,230 – $903,620 = $143,060
**
Job. No.
Units in
Inventory
Unit
Cost
Total
Cost