ADMS 2510 Lecture 3: ch03.pdf
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Vahedi Company manufactures a specialty line of silk-screenedties. The company uses a job-order costing system. During themonth, the following costs were incurred on Job 1041: directmaterials $54,800 and direct labor $19,200. In addition, sellingand shipping costs of $28,000 were incurred on the job.Manufacturing overhead was applied at the rate of $25 permachine-hour (MH) and Job 1041 required 320 MHs. If Job 1041consisted of 5,000 ties, the cost of goods sold per tie was: |
GIVEN: X Manufacturing Company uses a job order costing system.The following information summarizes its operations related toproduction for January, its first month of operations.
A. Purchased production materials on account, $85,000.
B. Production materials of $90,000 were requisitioned to thefactory for the five jobs started in January and for generalfactory use as follows:
Job | Materials |
Job No. 1001 | $15,000 |
Job No. 1002 | 14,000 |
Job No. 1003 | 11,800 |
Job No. 1004 | 20,200 |
Job No. 1005 | 22,000 |
General factory use | 7,000 |
$90,000 |
C. Factory labor costs of $71,000 were incurred. The employeetime tickets provided the following:
Job | Factory Labor |
Job No. 1001 | $ 10,000 |
Job No. 1002 | 11,750 |
Job No. 1003 | 10,250 |
Job No. 1004 | 14,800 |
Job No. 1005 | 18,200 |
General factory use | 6,000 |
$71,000 |
D. Factory overhead is allocated to jobs at a rate of $50 permachine hour. Machine hours used were:
Job | Machine Hours |
Job No. 1001 | 105 |
Job No. 1002 | 110 |
Job No. 1003 | 95 |
Job No. 1004 | 150 |
Job No. 1005 | 120 |
580 |
E. Depreciation on the factory machinery and equipment was$6,500.
F. Factory overhead costs incurred on account were $9,800.
G. Jobs 1001, 1002 and 1004 were completed.
H. Jobs 1001 and 1002 were shipped and the customers were billed$100,000 for job 1001 and $111,000 for job 1002.
REQUIRED:
Part 1: Prepare a schedule summarizing manufacturing costs byjob incurred in January. Use the following columns and providecolumn totals.
Job DirectMaterials DirectLabor FactoryOverhead Total
Part 2: What are the January 31 balances for each ofthe following accounts? Support your answers by indicating the jobsin that balance.
Work in ProcessInventory
Finished GoodsInventory
Cost of GoodsSold
Part 3: What was cost of goods manufactured forJanuary? (Show supporting work.)
Part 4: What was gross profit for January? (Showsupporting work.)
Part 5: Prepare summary journal entries forinformation a through h given above.
Basic Job Costing Project
Reed Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.
The following information pertains to December of the current year:
Job 10 | Job 11 | Job 12 | Total | |
Work-in-process, Dec. 1 | $16,000 | $26,000 | $38,000 | $80,000 |
The following transactions took place during the month of December:
1. Purchased raw materials for $25,000 on credit;
2. Requisitioned and used direct materials for the three jobs:
a. $4,000 for Job 10
b. $4,800 for Job 11
c. $7,200 for Job 12
3. Used indirect materials worth $20,000
4. . Incurred direct labor costs as follows:
a. $ 2,400 for Job 10
b. $3,600 for Job 11
c. $4,000 for Job 12
5. Incurred $30,000 worth of indirect manufacturing labor costs.
6. Depreciation on manufacturing plant and equipment $21,000.
7. During the month of December, the company used the following direct labor hours and machine hours for the three jobs:
Job 10 | Job 11 | Job 12 | Total | ||
Machine hours | 400 | 700 | 900 | 2,000 | |
Labor hours | 120 | 180 | 200 | 500 |
Required:
1. Compute the predetermined overhead application rate. |
2. Prepare the journal entries for the transactions that took place in December and apply manufacturing overhead to the jobs using the actual machine hours. 3. Determine the total cost associated with each job. 4. If jobs 10 and 12 were completed, prepared the journal entry to move jobs 10 and 12 to finished goods. 5. Delivered job 10 to customers that paid $40,000 cash; prepare the journal entries to sell job 10 and to recognize the associated cost of goods sold. 6. What is the cost assigned to ending work in process (control account)? 7. What is the cost assigned to ending finished goods (control account)? 8. How much was manufacturing overhead over/underapplied? |