Assignment No 3 - Job Order Costing

8/13/2019 Assignment No 3 - Job Order Costing

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Cost Accounting TauseefAhmed Qureshi

Job Order Costing

Assignment no 3

Problem 1

Williams, Inc had the following inventories on March 1

Finished Goods .. 1!,""" Wor# in $rocess 1%,"&" Materials . 1',"""The WI$ account controls three (o)s* Job 621 Job 622 Job 623Materials . +, "" -,'"" 1, ""

a)or .. +,1"" +,&"" 1,-!"A//lied F0 .. 1,2 " +,12" 1," " 2,! " ,+2" ',+-"

The following information /ertains to March 0/erations

a3 Materials /urchased and received ++,""".)3 Material re4uisitioned for /roduction, +1,""".0f this mount, +,'"" was for indirect

materials5 the difference was distri)uted* !,-"" to 6o) 2+15 &,'"" to 6o)2++* and !,%"" to 6o) 2+-.

c3 Materials returned to the store room from the factor7, 2"", of which +"" was forindirect materials, the )alance from 6o) 2++.

d3 Materials returned to vendors "".e3 $a7roll was - ,""" /aid in cash.f3 0f the /a7roll , direct la)or re/resented !! 8, indirect la)or +" 8, sales salaries 1! 85

and administrative salaries, 1" 8 9 the direct la)or cost was distri)uted 2,'+" to 6o)2+15 ,12" to 6o) 2++* and 2,-+" to 6o) 2+-3

g3 F0 , other than an7 /reviousl7 mentioned , amounted to !,!"". Included in this figure were

+,""" for de/reciation of factor7 )uilding and +!" for e:/ired insurance on the factor7.The reaming overhead -,+!" was un/aid at the end of March.

h3 F0 a//lied to /roduction* "8 of the direct la)or cost to )e charged to three (o)s )asedon the la)or cost of March.

i3 6o)s 2+1 ; 2++ were com/leted and transferred to the finished goods warehouse. (3


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Problem 2

The ?eit@ com/an7 had the following inventories on ?e/t 1.

Materials . 2",""" WI$ a)or -2,"""Finished Goods !",""" WI$Bfactor7 overhead +&,"""WI$B Materials -","""

Curing ?e/tem)er, the cost of materials /urchased was +"",""", direct la)or cost incurred was 1 ",""", and factor7 overhead a//lica)le to /roduction was &!8 of the direct la)or cost. The

?e/t -" inventories were as follows.

Materials . -",""" WI$ a)or .. +","""Finished Goods '&,""" WI$Bfactor7 overhead 1!,"""WI$B Materials 1+,"""

>e4uired*

T accounts showing the flow of the cost of goods manufactured and sold, using three

Problem No 3

ogle is a manufacturing firm that uses (o) order costing. 0n 6anuar7 1,1%:" the com/an7Dsinventor7 )alances were as follows*

>aw materials .. +",""" Wor# in /rocess 1!,""" Finished goods.. -","""

The com/an7 a//lies overhead cost to (o)s on the )asis of machineBhours wor#ed. For 1%:", thecom/an7 estimated that it would wor# &!,""" machineBhours and incur '!",""" inmanufacturing overhead cost.

The following transactions were recorded for the 7ear*

a. >aw materials were /urchased on account, '1",""".). >aw materials were re4uisitioned for use in /roduction de/artment , - ",""" 9

-2",""" direct and +",""" indirect3.c. The following cost was incurred for em/lo7ee services* direct la)or, &!,"""5 indirect

la)or, 11","""5 sales commission, %","""5 and administrative salaries, +"",""".d. sales travel costs were incurred, 1&,"""e. Etilit7 costs were incurred in the factor7, '-,""".f. Advertising cost were incurred, 1 ",""".

g. Ce/reciation were recorded for the 7ear, -!",""" 9 "8 relates to factor7 o/erations,and +" 8 relates to selling and administrative salaries3.h. Insurance e:/ired during the 7ear, 1",""" 9 &"8 relates to factor7 o/erations, and the

remaining -" 8 relates to selling and administrative salaries.i. Manufacturing overhead was a//lied to /roduction. Cue to greater than e:/ected

demand for its /roducts, the com/an7 wor#ed ",""" machineBhours during the 7ear. (. Goods costing %"",""" to manufacture were com/leted during the 7ear.#. Goods were sold on account to customers during the 7ear at a total selling /rice of

1,!"",""". The goods cost &",""" to manufacture.

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>e4uired*

1. $re/are (ournal entries to record the transaction a)ove.+. $ost the entries in 913 to T accounts including o/ening )alances.-. Is manufacturing over head is over a//lied or under a//lied for the 7ear $re/are a

(ournal entr7 to close an7 )alance in the manufacturing overhead account to cost ofgoods sold.

'. $re/are an income statement for the 7ear. Include a schedule of cost of goodsmanufactured and cost of goods sold.

Problem No 4

$ardee =om/an7 /roduces dis/osa)le food containers. This com/an7 uses a (o) order costs7stem. The firm s managerial accountant com/iled the following information*

13 $urchased raw material on account, %!,""".

+3 Issued raw materials to /roduction, ",""" 9%!8 direct, remainder indirect3-3 Cirect la)or cost incurred, %",""".'3 Indirect la)or cost incurred 1!,""".!3 0ther manufacturing overhead cost incurred are /aid, '",""", are de/reciation

e:/ense for /roduction e4ui/ment is '!,""".23 Manufacturing overhead is a//lied to (o)s on the )asis of % /er direct la)or hour.

There were 1+,""" direct la)or hours for the /eriod.&3 6o)s amounting to ++!,""" were com/leted.

3 6o)s costing +"",""" were shi//ed to customers. $ardee =om/an7 uses a -"8mar#u/ on cost rate. These orders were sold on account.

>e4uired*

Give the (ournal entries for the transactions a)ove. If wor# on /rocess inventor7 had a )alance of",""" at the )eginning of the /eriod, what is the ending )alance for wor# in /rocess inventor7

What is the ending )alance for manufacturing overhead

Problem No 5

The Glavine =or/oration manufactures /recision e4ui/ment made to order for the semiconductorindustr7. Glavine uses two manufacturing over head cost /ools B one for the overhead costsincurred n its highl7 automated Machining Ce/artment and another for overhead costs incurred inits la)orB/aced Assem)l7 de/artment. Glavine uses a normal costing s7stem. It allocatesMachining Ce/artment overhead costs to (o)s on the )asis of actual machine hours using a

)udgeted machineBhour rate. It allocated Assem)l7 Ce/artment overhead costs to (o)s on the)asis of actual direct manufacturing la)orBhours using a )udgeted direct manufacturing la)or hourrate.

The following data are for the 7ear +""".

Machining Ce/artment Assem)l7 Ce/artment

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e4uired*

1. =om/ute the )udgeted overhead rates for the 7ear+""" in the Machining and Assem)l7Ce/artments.

+. =om/ute the under or over allocated overhead in each de/artment in +""". $rorate theunder over allocated amount in each de/artment using*9a3 Immediate writeBoff to =ost of Goods sold.9)3 $roration )ased on ending )alances 9 )efore /roration3 in cost of goods sold,

Finished goods, and Wor#BinB/rocess9c3 $roration )ased on the allocated overhead amount 9 )efore /roration3 in the ending

)alances of =ost of goods sold, Finished goods, and Wor#BinB/rocess-. Which /roration method do 7ou /refer in re4uirement +.H:/lain

Problem No 6

Mar#ham =om/an7 uses a normal (o) order costing s7stem. 0verhead rates are a//lied on the)asis of machine hours in Ce/artment 1 and direct la)or dollars in Ce/artment +.


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Cirect materials -!","""Cirect la)or hours 9C 3 Ce/artment 1 1,"""

Ce/artment + +,"""Machine ours 9M 3 Ce/artment 1 !,"""

Ce/artment + +,""">e4uired*

1. What is the total factor7 overhead a//lied to 6o) %'B22%.+. Curing the 7ear, actual direct la)or wage rates and factor7 overhead incurred in

Ce/artment 1 and + were as )udgeted. Also !+,""" direct la)or hours and -!,"""machine hours were used in Ce/artment 1 for /roduction, whereas % ,""" C and'2,""" M were used in Ce/artment+. =alculate the overhead for Mar#ham =om/an7.

Problem No 7 Quick-Print Com !n"

The 4uic#B/rint com/an7 /u)lishes mailBorder catalogs and /hone )oo#s for firms located throughoutthe ?outheast. A (o) order costing s7stem is used to accumulate the costs incurred or each /rinting

(o). At the )eginning of August 1%%", two (o)s were in /rocess* (o) 11 with assigned costs of1',!2" and (o) 1- with assigned costs of +,1"". The following transactions were recorded )7 the

/rint sho/ during August*

>aw material costing 2!,""" were /urchased on accounts.?ho/ su//lies costing ',+"" were /urchased on accounts.>aw materials and sho/ su//lies re4uisitioned during August were*>aw materials* 6o) 1- 9 ,!""3 , 6o) 1' 9 12,!""3 , 6o) 1! 9 1+,"""3,?ho/ ?u//lies -,-""

a)or hours wor#ed during the month were* 6o) 11 9 '1" 3 , 6o) 1- 9 2+"3 ,6o) 1' 9 &!"3, 6on 1 !911"3,indirect la)or 91'"3Hach wor#er is /aid 1+ /er hour.Ce/reciation on sho/ e4ui/ment was !,+"".0ther sho/ overhead was %,1!"?ho/ overhead was a//lied to the /rinting (o)s at the rate of 1".!" /er directla)or hour.6o)s 11, 1-, and 1' were com/leted and sold during the month.

>e4uired*

A. Was sho/ overhead or under a//lied during Augustaw materials

1 ,"""

WI$ 1","""

Finished goods !","""

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Curing 1%%", the firm recorded these transactions*

1. >aw materials amounting to 11!,""" were /urchased on account.+. 1"",""" of raw materials was re4uisitioned to /roductionB %",""" direct and 1","""

indirect.-. $a7roll e:/enses during 1%%" were*

Cirect la)or, manufacturing 9'',""" hours3-!+,"""

Indirect la)or, manufacturing 1 ,"""

?ales re/resentative salaries -","""

Administrative salaries '!,"""

'. $lant utilit7 e:/enses were +&,""".!. $lant insurance e:/enses were 1',!"".2. Advertising e:/ense was 1!,""".&. !,""" of de/reciation e:/ense was recorded on /lant e4ui/ment.

. -",""" of de/reciation e:/ense was recorded on the factor7 )uilding.%. 0ther manufacturing overhead was 12,""".1". 0ther selling and administrative e:/enses were 1 ,""".11. Manufacturing overhead was a//lied to wor# in /rocess using a /redetermined overhead

rate of +. " /er direct la)or hour.1+. 6o)s com/leted and transferred to finished goods were !!-,!"".1-. Finished goods totaling !2-,!"" were sold at a mar#u/ of '"8 a)ove cost.

>e4uired*

A. $re/are (ournal entries to record the 1%%" transactions.e4uired*

A. Cetermine the cost of each (o).< ' Cetermine the amount of cost of goods sold for Fe).=. What was the total cost of direct materials re4uisitioned in Fe) and

transferred to WI$.C. What was the WI$ inventor7 on Fe) +

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Assignment No 3 - Job Order Costing

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