CHAPTER 5 Job-Order Costing
E 5-43 (Continued)
4. Work in Process:
Beginning balance…………………………………………
…
$0
Direct materials……………………………………………… 24,500
5. Finished Goods:
Beginning balance…………………………………………
…
$ 25,600
Jobs transferred in:
E 5-44
1. Allocation ratios for Power based on number of machine hours:
Battery = 7,000/(7,000 + 1,000) = 0.8750
2.
General Small
Power Factory Battery Motors
Direct costs………………
…
$160,000 $430,000 $163,000 $ 84,600
Operating DivisionsSupport Departments
5-18
CHAPTER 5 Job-Order Costing
E 5-45
1. Allocation ratios for General Factory based on square footage:
Power = 1,000/(1,000 + 5,000 + 15,000) = 0.0476
2. Support Departments
General Small
Power Factory Battery Motors
Direct costs………………
…
$ 160,000 $163,000 $ 84,600
$ 430,000
Operating Divisions
5-19
CHAPTER 5 Job-Order Costing
P 5-46
1. Overhead Rate = $789,000/100,000 DLH = $7.89 per DLH
2. Job 741 Job 743 Job 744 Job 745
Balance, July 1……
…
$ 29,870 $27,880 $ 0 $ 0
Direct materials……
…
25,500 14,450 13,600 8,420
P 5-47
1. Cost of Alban job:
Professional time (85 hours × $120)……………………………
…
$10,200
2. Overhead is included in the rate for professional time. This is easier for
PROBLEMS
Job 742
$ 55,215
39,800
CHAPTER 5 Job-Order Costing
P 5-47 (Continued)
3. Answers may vary. The following is one example.
Beginning Ending Total
Date Client Mileage Mileage Miles
7/8 Alban 56,780 56,815 Ofc. to claimant #1, 35
to Dr. Phony, to
Rex Spade Mileage Log
Destination
CHAPTER 5 Job-Order Costing
P 5-48
1. Overhead Rate = $374/$440 = 0.8500 times direct labor cost
2. Carte
r
Pellham Tillson Jaspe
r
Dashell
Beginning WIP……
…
$1,024 $1,910 $3,621 $ 0 $ 0
3. Since the Tillson and Jasper jobs were completed, the others must still be in
process. Therefore, the ending balance in Work in Process is the sum of the costs
4.
Sales (1.30 × $11,030)……………………………………………………………
…
$14,339
Pavlovich Prosthetics Company
Income Statement
For the Month Ended January 31
P 5-49
1. OH Rate = $108,000/18,000 mhrs = $6.00 per machine hour
3.
Plantwide: Plantwide:
4. Plantwide rate: $135,000/18,000 mhrs = $7.50
Department B: $60,000/8,000 mhrs = $7.50
Plantwide: Plantwide:
Job 73
Job 73 Job 74
Job 74
CHAPTER 5 Job-Order Costing
P 5-50
1. Overhead Rate = $432,000/8,000 mhrs = $54.00 per machine hour
Job 1 Job 2
Direct materials…………………………………………… $ 6,725 $ 9,340
2. Welding Overhead Rate = $220,000/5,000 mhrs = $44.00 per machine hour
Job 1 Job 2
Direct materials……………………………………………
…
$ 6,725 $ 9,340
Direct labor………………………………………………… 1,800 3,100
CHAPTER 5 Job-Order Costing
P 5-51
1. Jan’s Job Ed’s Job
Materials……………………………………………….…………
…
$50 $75
2. Since Jan’s job is more like the jobs Steve is used to doing, her costs are likely
to be more accurate. Clearly, Steve is unsure just how to cost Ed’s job. If he
P 5-52
1. Job 64:
Direct materials…………………………………………….……
…
2. Ending Work in Process = Cost of Job 65
= $785 + $9,328 + ($11 × 583 DLH) = $16,526
3.
Finished Goods
14,790
Date
Journal
CreditAccount & Explanation Debit
$ 3,560
5-25
CHAPTER 5 Job-Order Costing
P 5-53
1.
Debit
a. Raw Materials 4,610
Accounts Payable 4,610
2.
Direct materials……………
…
$3,170 Direct materials……………
…
$1,630
Debit
f. Finished Goods 4,483
Date Account & Explanation Credit
Journal
Date Account & Explanation Credit
Job 518 Job 519
Journal
5-26
CHAPTER 5 Job-Order Costing
P 5-53 (Continued)
3.
Direct materials:
Beginning raw materials inventory…………
…
$1,025
P 5-54
1. = Direct Labor Cost × Overhead Rate
= $80,000 × Overhead Rate
= 1.75 or 175% of Direct Labor Cost
Nelson Company
Schedule of Cost of Goods Manufactured
For the Month Ended April 30
Overhead Rate
$140,000
Applied Overhead
…
CHAPTER 5 Job-Order Costing
P 5-54 (Continued)
4.
Debit
Overhead Control 1,500
Ending work in process…………………………………………………… $32,000
P 5-55
1. Overhead Rate = $129,600/13,500 DLH = $9.60 per direct labor hour
2. Direct materials…………………………………………………………………
…
$ 2,750
*$9.60 × ($5,355/$17) = $3,024
3.
Debit
Overhead Control 172,500
Lease Payable 6,800
Overhead Control 173,760
4. Actual overhead……………………………………………
…
$172,500
Applied overhead……………………………………..……
…
173,760
Overapplied overhead…………………………………
…
$ 1,260
Date Account & Explanation Credit
Journal
Date Account & Explanation Credit
Journal
5-28
CHAPTER 5 Job-Order Costing
P 5-56
1.
Debit
a. Raw Materials 42,630
Accounts Payable 42,630
2. Job 703:
Beginning balance, WIP…………………………………
…
$10,000
Direct materials……………………………………………
…
12,500
…
Journal
Date
A
ccount & Explanation Credit
5-29
CHAPTER 5 Job-Order Costing
P 5-56 (Continued)
3.
Debit Credit
f. Finished Goods 41,220
Work in Process 41,220
4. a. Raw Materials:
Beginning balance………………………
…
$ 6,070
Add: Purchases………………………
…
42,630
Less: Materials requisitioned………… (27,000)
Ending balance………………………
…
$ 21,700
…
…
…
…
Journal
Date Account & Explanation
5-30
CHAPTER 5 Job-Order Costing
P 5-57
1. Direct method:
Proportion of: Laboratory Pathology
Number of samples……………………
…
0.6000 0.4000
2. Delivery
A
ccounting Laboratory Pathology
Transactions……………… 0.0500 — 0.6175 0.3325
Number of samples……… — — 0.6000 0.4000
P 5-58
1. a. Direct method:
Drilling
A
ssembly
Machine hours………………………
…
0.8000 0.20
CHAPTER 5 Job-Order Costing
P 5-58 (Continued)
Drilling: $459,000/30,000 mhrs = $15.30 per machine hour
b. Sequential method: Allocate Power first, then Maintenance
Maintenance Power Drilling Assembly
Machine hours……
…
— — 0.80 0.20
…
…
…
Maintenance:
(0.80 × $360,000)
…
(288,000) — 288,000
(0.20 × $360,000)
…
(72,000) 72,000
Total…………………
…
$0$0
$487,000 $486,000
2. The sequential method is the more accurate because it considers some of the
support department interactions.
5-32
CHAPTER 5 Job-Order Costing
Case 5-59
1. Mrs. Lucky won’t like being charged more for one job when the same number
and type of announcements were produced in each job.
2. May: Actual Rate = $20,000/500 hours = $40 per hour
3. Predetermined Rate = $240,000/(500 hours × 12) = $40 per hour
Cost and price of each job:
Direct materials……………………
…
CASES
$250.00
CHAPTER 5 Job-Order Costing
Case 5-60
1. The solution Doug proposes is not ethical. Although maintaining the current
plantwide rate is probably not illegal, its continuation has one purpose: to extract
extra profits from government business. Doug knows the plantwide rate is not
2. Tonya should first determine whether or not Gunderson has a corporate code of
conduct. She can pursue the avenues suggested by the code. For example, if