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    Job Order Costing

    Uploaded by

    Trina Mae Barroga
    Job order costing is used to track and assign costs to specific jobs. The document outlines transactions including purchasing raw materials, issuing materials into production, incurring labor costs, recording overhead costs, completing jobs, selling finished goods, and closing overhead accounts. It also provides a job costing problem requiring the calculation of total costs assigned to a specific job.

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    © All Rights Reserved
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    Job Order Costing

    Uploaded by

    Trina Mae Barroga
    150 views4 pages
    Job order costing is used to track and assign costs to specific jobs. The document outlines transactions including purchasing raw materials, issuing materials into production, incurring labor costs, recording overhead costs, completing jobs, selling finished goods, and closing overhead accounts. It also provides a job costing problem requiring the calculation of total costs assigned to a specific job.

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    Job order costing is used to track and assign costs to specific jobs. The document outlines transactions including purchasing raw materials, issuing materials into production, incurring labor costs, recording overhead costs, completing jobs, selling finished goods, and closing overhead accounts. It also provides a job costing problem requiring the calculation of total costs assigned to a specific job.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    150 views4 pages

    Job Order Costing

    Uploaded by

    Trina Mae Barroga
    Job order costing is used to track and assign costs to specific jobs. The document outlines transactions including purchasing raw materials, issuing materials into production, incurring labor costs, recording overhead costs, completing jobs, selling finished goods, and closing overhead accounts. It also provides a job costing problem requiring the calculation of total costs assigned to a specific job.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Job order Costing

    Problem 1:
    ABC uses job-order costing. It applies overhead cost to jobs on the basis of direct labor-
    hours. The following transactions took place during the year:

    a) 300,000 of raw materials were purchased on account


    b) Raw materials were issued into production: 90,000 direct materials and 40,000
    indirect materials
    c) Labor costs incurred: 40,000 direct, 130,000 indirect, sales commissions 50,000,
    administrative salaries 100,000
    d) Utility costs for the factory were 60,000
    e) Depreciation recorded was 300,000 (70% related to factory; 30% related to
    administrative offices)
    f) Manufacturing overhead of 715,000 was applied to production. Actual direct
    labor-hours incurred were 22,000.
    g) Units costing 300,000 were completed and transferred into the finished goods
    inventory.
    h) Goods with a cost of 150,000 were sold on account for 200,000.
    i) Closed the under/overapplied overhead for the year
    Required:
    Prepare journal entries for each of the transactions indicated above.

    Problem 2:

    Company XYZ makes custom motorboats. It incurred the following costs for the just-
    completed job B011. 500 pounds of direct materials were used at a cost per pound of $25.
    The job cost sheet indicates that a total of 90 direct labor-hours incurred on job B011.
    The workers were paid at a rate of $18 per hour. The company applies overhead based on
    machine hours. At the beginning of the year, it was estimated that the total amount of
    overhead would be $180,000 and a total of 30,000 machine hours would be incurred. Job
    B011 required 150 machine hours.

    Required:
    Determine the total cost assigned to Job B011.

    True or False. Write T if the statement is true and write F if it’s incorrect.
    1. When raw materials are issued into production the Raw Materials account
    is debited.
    2. Manufacturing overhead account is debited for the actual overhead costs
    incurred.
    3. Finished Goods inventory account is credited for the amount of cost of
    goods manufactured during a period.
    4. When direct labor costs are incurred, Work in Process is debited.
    5. The cost in the ending Finished Goods inventory account consists of the
    direct materials, direct labor, and manufacturing overhead of all jobs still in
    process at the end of the period.
    6. Selling expenses are applied to production using a predetermined
    overhead rate.
    7. Indirect materials are part of manufacturing overhead.
    8. Job cost sheets are used in accounting systems as a subsidiary ledger for
    the Work-in-Process account.
    9. A company that produces cornflakes will most likely use a job-order cost
    system.
    10. Indirect materials issued into production should be debited to Work
    in Process.

    Place Your Answers Here:

    Problem 1

    a. Raw Materials 300,000


    Accounts Payable 300,000

    b. Work-In-Process Inventory 90,000


    Manufacturing Overhead Inventory 40,000
    Raw Materials 130,000

    c. Work-In-Process Inventory 40,000


    Manufacturing Overhead Inventory 130,000
    Sales Commission Expense 50,000
    Administrative Salaries Expense 100,000
    Salaries and wages payable 320,000

    d. Manufacturing Overhead 60,000


    Accounts Payable 60,000
    e. Manufacturing Overhead Inventory 210,000
    Depreciation Expense 90,000
    Accumulated Depreciation 300,000

    f. Work-In-Process Inventory 715,000


    Manufacturing overhead 715,000

    g. Finished Goods 300,000


    Work-In-Process 300,000

    h. Accounts Receivable 200,000


    Sales 200,000

    Cost of goods sold 150,000


    Finished goods 150,000

    i. Manufacturing overhead 275,000


    Cost of goods sold 275,000

    Problem 2 (show your computations)

    Given:
    Direct Material used = 500 pounds
    Cost of Direct Material per pound = $25
    Direct Labor hours= 90
    Wages per hour= $18
    Total Overhead = $180,000
    Total Machine Hours = 30,000
    Required Machine Hours in Job B011= 150
    Total cost to Job B011: ?

    Solution:
    Direct Material used = 500 pounds x $25 =12,500
    Direct Labor hours = 90 X $18 = 1,620
    Overhead applied to job BO11= $180,000 / 30,000 x 150 = 900
    Total job cost: 15,020

    True or False
    1. F
    2. T
    3. F
    4. T
    5. F
    6. F
    7. T
    8. T
    9. F
    10. F

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