Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
CHAPTER 20
Job Order Costing
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
1. Describe cost systems and
the flow of costs in a job
order system.
1, 2, 3, 4, 5,
6, 7, 8
1, 2
1
1, 2, 3, 4, 6,
7, 8, 9, 11
1A, 2A, 3A,
5A
2. Use a job cost sheet to
assign costs to work in
process.
9, 10, 11, 12
3, 4, 5
2
1, 2, 3, 6, 7,
8, 10, 12
1A, 2A, 3A,
5A
3. Demonstrate how to
determine and use the
predetermined overhead
rate.
13, 14, 15
6, 7
3
2, 3, 5, 6, 7,
8, 11, 12, 13
1A, 2A, 3A,
4A, 5A
4. Prepare entries for
manufacturing and service
jobs completed and sold.
16
8, 9
4
2, 3, 6, 7, 8,
10, 11, 12
1A, 2A, 3A,
5A
5. Distinguish between under-
and overapplied
manufacturing overhead.
17, 18
10
5
4, 5, 9, 13
1A, 2A, 3A,
4A, 5A
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Prepare entries in a job order cost system and job cost
sheets.
Simple
30 40
2A
Prepare entries in a job order cost system and partial
income statement.
Moderate
30 40
3A
Prepare entries in a job order cost system and cost of
goods manufactured schedule.
Simple
30 40
4A
Compute predetermined overhead rates, apply overhead,
and calculate under- or overapplied overhead.
Simple
20 30
5A
Analyze manufacturing accounts and determine missing
amounts.
Complex
30 40
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
1. Describe cost systems and the
flow of costs in a job order
system.
Q20-5
Q20-7
Q20-8
Q20-1 Q20-4
Q20-2 Q20-6
Q20-3 BE20-1
BE20-2
DI20-1
E20-1
E20-2
E20-3
E20-6
E20-7
E20-8
E20-9
E20-11
P20-1A
P20-3A
E20-4
P20-2A
P20-5A
2. Use a job cost sheet to assign
costs to work in process.
Q20-11
Q20-12
Q20-9
Q20-10
BE20-3
BE20-4
BE20-5
DI20-2
E20-1
E20-2
E20-3
E20-6
E20-7
E20-8
E20-10
E20-12
P20-1A
P20-3A
P20-2A
P20-5A
3. Demonstrate how to determine
and use the predetermined
overhead rate.
Q20-15
Q20-13
Q20-14
BE20-6
BE20-7
DI20-3
E20-2
E20-3
E20-6
E20-7
E20-8
E20-11
E20-12
E20-13
P20-1A
P20-3A
P20-4A
E20-5
P20-2A
P20-5A
4. Prepare entries for
manufacturing and service jobs
completed and sold.
Q20-16
BE20-9
BE20-8
DI20-4
E20-2
E20-3
E20-6
E20-7
E20-8
E20-10
E20-11
E20-12
P20-1A
P20-3A
P20-2A
P20-5A
5. Distinguish between under- and
overapplied manufacturing
overhead.
Q20-17
Q20-18
E20-9
BE20-10
E20-13
P20-1A
P20-3A
P20-4A
DI20-5
E20-4
E20-5
P20-2A
P20-5A
Broadening Your Perspective
BYP20-3
BYP20-4
CD20
BYP20-2
BYP20-1
BYP20-5
BYP20-6
BYP20-7
ANSWERS TO QUESTIONS
1. (a) Cost accounting involves the measuring, recording, and reporting of product costs. A cost
accounting system consists of manufacturing cost accounts that are fully integrated into the
2. (a) The two principal types of cost accounting systems are: (1) job order cost system and
(2) process cost system. Under a job order cost system, costs are assigned to each job or
batch of goods; at all times each job or batch of goods can be separately identified. A job
order cost system measures costs for each completed job, rather than for set time periods.
3. A job order cost system is most likely to be used by a company that receives special orders, or
custom builds, or produces heterogeneous items or products; that is, the product manufactured or
4. A process cost system is most likely to be used by manufacturing firms with continuous production
flows usually found in mass production, assembly line, large-volume, uniform, or relatively similar
product industries. Companies producing appliances, chemicals, pharmaceuticals, rubber and tires,
plastics, cement, petroleum, and automobiles utilize process cost systems.
5. The major steps in the flow of costs in a job order cost system are: (1) accumulating the manufacturing
costs incurred and (2) assigning the accumulated costs to work done.
6. The three inventory control accounts and their subsidiary ledgers are:
7. The source documents used in accumulating direct labor costs are time tickets and time cards.
8. Disagree. Entries to Manufacturing Overhead are also made at the end of an accounting period.
For example, there will be adjusting entries for factory depreciation, property taxes, and insurance.
Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 20-5
Questions Chapter 20 (Continued)
10. The purpose of a job cost sheet is to record the costs chargeable to a specific job and to determine
the total and unit costs of the completed job.
11. The source documents for charging costs to specific jobs are materials requisition slips for direct
materials, time tickets for direct labor, and the predetermined overhead rate for manufacturing
overhead.
14. The relationships for computing the predetermined overhead rate are the estimated annual overhead
costs and an expected activity base such as direct labor hours. The rate is computed by dividing
the estimated annual overhead costs by the expected annual operating activity.
15. At any point in time, the balance in Work in Process Inventory should equal the sum of the costs
shown on the job cost sheets of unfinished jobs. Alternatively, posting to Work in Process Inventory
may be compared with the sum of the postings to the job cost sheets for each of the manufacturing
cost elements.
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 20-1
20-6
Raw Materials Inventory
Work in Process Inventory
Finished Goods Inventory
(1) Purchases
(4) Materials
used
(4) Direct
materials used
(7) Cost of com-
pleted jobs
(7) Cost of com-
pleted jobs
(8) Cost of goods
sold
(5) Direct labor
used
(6) Overhead
applied
Key to Entries:
Accumulation
Assignment
1. Purchase raw materials
4. Raw materials are used
2. Incur factory labor
5. Factory labor is assigned
BRIEF EXERCISE 20-2
Jan. 31 Raw Materials Inventory ...................................... 4,000
Accounts Payable ......................................... 4,000
31 Factory Labor ....................................................... 6,000
BRIEF EXERCISE 20-3
BRIEF EXERCISE 20-4
Jan. 31 Work in Process Inventory .................................. 5,200
BRIEF EXERCISE 20-5
Job 1
Job 2
Date
Direct
Materials
Direct
Labor
Date
Direct
Materials
Direct
Labor
1/31
900
1/31
1,200
BRIEF EXERCISE 20-6
Overhead rate per direct labor cost is 180%, or ($900,000 ÷ $500,000).
BRIEF EXERCISE 20-7
Jan. 31 Work in Process Inventory ............................. 28,000
BRIEF EXERCISE 20-8
Mar. 31 Finished Goods Inventory .............................. 50,000
Work in Process Inventory ...................... 50,000
BRIEF EXERCISE 20-9
Service Contracts in Process ......................... 28,000
Operating Overhead ........................................ 8,000
Service Salaries and Wages ................... 36,000
BRIEF EXERCISE 20-10
Shimeca Company
Dec. 31 Cost of Goods Sold ......................................... 1,200
Manufacturing Overhead ........................ 1,200
Garcia Company
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 20-1
(a) Raw Materials Inventory ............................................ 18,000
Accounts Payable ............................................... 18,000
(Purchases of raw materials on account)
DO IT! 20-2
The three summary entries are:
Work in Process Inventory ($7,200 + $9,000) .................. 16,200
Raw Materials Inventory ............................................ 16,200
(To assign materials to jobs)
DO IT! 20-3
The predetermined overhead for Washburn Company is:
$200,000 2,500 hours = $80.00
DO IT! 20-4
Finished Goods Inventory ................................................ 120,000
Work in Process Inventory ........................................ 120,000
(To record completion of Job 310, costing
$70,000 and Job 312, costing $50,000)
DO IT! 20-5
Manufacturing overhead applied = 130% X $85,000 = $110,500
Underapplied manufacturing overhead = $115,000 – $110,500 = $4,500
SOLUTIONS TO EXERCISES
EXERCISE 20-1
(a) Factory Labor .......................................................... 90,000
Factory Wages Payable .................................. 76,000
Employer Payroll Taxes Payable .................... 8,000
EXERCISE 20-2
(a) May 31 Work in Process Inventory .................... 10,400
Manufacturing Overhead ....................... 800
Raw Materials Inventory ................ 11,200
31 Work in Process Inventory .................... 12,500
(b)
Work in Process Inventory
May 1 Balance 3,500
31 10,400
May 31 7,540
EXERCISE 20-2 (Continued)
Job Cost Sheets
Job
No.
Beginning Work
in Process
Direct
Material
Direct
Labor
Manufacturing*
Overhead
Total
430
$1,500
$3,500
$ 3,000
$1,800
$ 9,800
EXERCISE 20-3
(a) (1) $15,200, or ($5,000 + $6,000 + $4,200).
(b) Jan. 31 Work in Process Inventory ...................... 8,000
Raw Materials Inventory ................... 8,000
31 Work in Process Inventory ...................... 12,000
Factory Labor .................................... 12,000
EXERCISE 20-4
(a) + $50,000 + $42,500 = $145,650
(a) = $53,150
EXERCISE 20-4 (Continued)
[Note: The instructions indicate that manufacturing overhead is applied on the
basis of direct labor cost, and the rate is the same in all cases. From Case A,
a student should note the overhead rate to be 85%, or ($42,500 ÷ $50,000).]
(d) = .85 X $140,000
(d) = $119,000
[Note: (h) and (i) are solved together.]
(i) = .85(h)
(j) = $213,000 + $18,000
(j) = $231,000
EXERCISE 20-5
(a) $2.40 per machine hour ($300,000 ÷ 125,000 MH).
EXERCISE 20-6
(a) (1) The source documents are:
Direct materials—Materials requisition slips.
(2) The predetermined overhead rate is 125% of direct labor cost. For
example, on July 15, the computation is $550 ÷ $440 = 125%. The
same result is obtained on July 22 and 31.
(3) The total cost is:
Direct materials ............................................................ $4,700
(b) July 31 Finished Goods Inventory ............................ 7,760
Work in Process Inventory ................... 7,760
EXERCISE 20-7
1. Raw Materials Inventory ................................................ 46,300
Accounts Payable .................................................. 46,300
EXERCISE 20-7 (Continued)
5. Manufacturing Overhead ....................................... 80,500
Accounts Payable .......................................... 80,500
6. Depreciation Expense ........................................... 8,100
Accumulated Depreciation—Building ........... 8,100
EXERCISE 20-8
1. Raw Materials Inventory ........................................ 192,000
Accounts Payable .......................................... 192,000
Factory Labor ......................................................... 87,300
Factory Wages Payable ................................. 87,300
EXERCISE 20-8 (Continued)
4. Manufacturing Overhead ....................................... 14,550
Accumulated Depreciation—Equipment ...... 14,550
5. Depreciation Expense ............................................ 14,300
Accumulated Depreciation—Building ........... 14,300
Computation of cost of jobs finished:
Job
Direct
Materials
Direct
Labor
Manufacturing
Overhead
Total
A20
$35,240
$18,000
$16,200
$ 69,440
EXERCISE 20-9
(a) LOPEZ COMPANY
Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2017
Work in process, May 1 ........................................ $ 14,700
Direct materials used ........................................... $62,400
EXERCISE 20-9 (Continued)
(b) LOPEZ COMPANY
(Partial) Income Statement
For the Month Ended May 31, 2017
Sales revenue ..................................................... $215,000
Cost of goods sold
Finished goods, May 1 ............................... $ 12,600
(c) LOPEZ COMPANY
(Partial) Balance sheet
May 31, 2017
Current assets:
Finished goods inventory .......................... $ 9,500
EXERCISE 20-10
(a) Work in Process Inventory
April 30 $ 9,300 (#10, $5,200 + #11, $4,100)
(b) Finished Goods Inventory
April 30 $ 1,200 (#12)
(c) Gross Profit
Month
Job
Number
Sales
Cost of
Goods Sold
Gross
Profit
May
12
$ 1,500
$ 1,200
$ 300
EXERCISE 20-11
(a)
1.
Supplies ............................................
1,800
Accounts Payable .....................
1,800
2.
Service Contracts in Process ..........
720
Operating Overhead .........................
480
Supplies .....................................
1,200
5.
Service Contracts in Process
($56,000 X 90%) .............................
50,400
Operating Overhead ..................
50,400
6.
Cost of Completed Service
Contracts .......................................
75,000
Service Contracts in Process ...
75,000
(b)
Service Contracts in Process
2.
720
75,000
6.
3.
EXERCISE 20-12
(a)
Lynn
Brian
Mike
Direct materials
$ 600
$ 400
$ 200
Auditor labor costs
5,400
6,600
3,375
(b) The Lynn job is the only incomplete job, therefore, $9,600.
(c) Actual overhead
$11,000 (DR)
EXERCISE 20-13
(a) Predetermined overhead rate = Estimated overhead ÷ Estimated
decorator hours
(b) Service Contracts in Process (40,500 hrs X $24) .....
972,000
Operating Overhead .....................................
972,000
