Job Order Costing Exercises

1. Which of the following will most likely use a job order costing?
a. Manufacturer of soft drinks

b. Production of notebooks
c. Making of cakes
d. Manufacturer of laptops
2. When materials are purchased, the journal entry will include a debit to
a. Work in Process Inventory
b. Materials
c. Factory Overhead Control
d. Accounts Payable
3. When direct materials are used in production, the journal entry will be
a. Debit: Materials; Credit: Accounts Payable
b. Debit: Factory Overhead Control; Credit: Materials
c. Debit: Work in Process Inventory; Credit: Materials
d. Debit: Materials; Credit: Work in Process Inventory
4. When indirect labor is used in production, the journal entry will be

a. Debit: Direct; Credit: Accounts Payable
b. Debit: Factory Overhead Control; Credit: Payroll
c. Debit: Work in Process Inventory; Credit: Payroll
d. Debit: Payroll; Credit: Work in Process Inventory
5. Which of the following will be credited in the Work in Process Inventory?

a. Direct materials
b. Direct labor
c. Applied Factory Overhead
d. Cost of goods completed
6. Asoka Corporation is currently producing Job 613. It applies factory overhead at 60% of direct
labor. Below are the costs related to Job 613. How much is the cost of Job 613.
Direct materials P4,200

Direct labor cost 2,100
Cost of Job 613:

Direct material cost P4,200
Applied Factory Overhead (P2,100*60%) 1,260
Total Cost P7,560
Under job order costing, the cost of each job is the total of direct material cost, direct labor cost
and applied overhead cost.
7. Job 1204 was started by the compay last month and has a beginning work in process
balance of P3,600. During the month, additional cost of Job 1204 are as follows. How much is
the cost of the job?
Direct materials used P2,000

Direct labor hours used 60 hours
Rate per direct labor hour P25
Overhead rate per direct labor hour. P15
Cost of Job 613:

Work in Process Inventory P3,600
Direct material cost 2,000
Direct labor cost (60 hours*P25) 1,500
Applied Factory Overhead (60 hours*P15) 900
Total Cost P8,000
If Job 613 has a beginning inventory, the cost of the job in the work in process inventory, it
should be included in the computation of the total cost of the job.
8. How much is the cost of Job 1118 if it applies factory overhead based on direct labor?
Budgeted direct labor P80,000

Budgeted overhead 40,000
Direct material 50,000
Direct labor 45,000
Since no overhead rate is given, compute first for the overhead rate using the budgeted
amounts.
Overhead rate = Budgeted overhead
Budgeted labor
= P40,000
P80,000
= 50%
To compute for cost of Job 1118:

Direct material cost P50,000
Applied Factory Overhead (P45,000*50%) 22,500
Total Cost P117,500
9. Using the same data in number 8, if the company incurs an actual factory overhead of
P30,000, how much is the overapplied and underapplied overhead?
Actual overhead P30,000

Applied overhead P22,500
Underapplied overhead P 7,500
10. The company has the following information related to its work in process inventory.
Beginning inventory P25,000

Direct materials 70,000
Direct labor 32,000
Applied factory overhead 48,000
Ending inventory 55,000
What is the predetermined overhead rate?
Since the applied factory overhead is already given,

Overhead rate = Overhead
Direct labor
= P48,000
P32,000
= 150%
11. Using the same information in number 10, how much is the cost of the completed products
transferred to finished goods?
Direct labor 32,000
Total Goods Put into Process 175,000
Less: Ending inventory 55,000
Cost of Goods Manufactured P120,000
And transferred to finished goods.
12. Using the same information in number 10, the ending inventory is composed of a single job
still in process with a direct labor cost of P10,000. How much is the direct materials charged to
the job?
The cost of the job still in process is P55,000 which is composed of direct materials, direct labor,
and applied factory overhead. Out of the three, only direct labor cost was given. We can use this
to compute for the applied factory overhead and work back to compute the direct materials cost
charged to the job:

Direct labor 10,000
Applied factory overhead (10,000*150%) 15,000
Total Cost in WIP, end P55,000
13. The company has the following information related to its work in process inventory.

Direct materials. 110,000
Direct labor 80,000
The company applies overhead at 75% of direct labor. Several jobs were completed during the
month with the following cost:
Direct Materials 74,000
Direct labor 60,000
How much is transferred to finished goods?
To compute the cost of the transferred goods when no WIP ending inventory is given, you can
directly compute by adding direct materials, direct labor, and applied factory overhead. This
amount will then be credited under the WIP T-Account.
Direct Materials 74,000

Direct labor 60,000
Applied factory overhead (60,000*75%) 45,000
Transferred to finished goods P179,000
14. How much is the ending balance of Work in Process Inventory?

Direct materials. 110,000
Direct labor 80,000
Cost of Goods put into Process 290,000
Less: Cost of goods manufactured 179,000
And transferred to Finished Goods P111,000
15. Given the following, how much is the over or underapplied overhead?
Budgeted labor P500,000
Budgeted overhead P600,000
Actual labor P700,000
Actual overhead P800,000
Overapplied/Underapplied = Applied Overhead – Actual Overhead

= P840,000 - P800,000
Overapplied Overhead = P40,000
Applied Overhead = Predetermined rate * Actual Direct labor

= (P600,000/500,000) * P700,000
= 120% * P700,000
= P840,000

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1. Which of the following will most likely use a job order costing?

a. Manufacturer of soft drinks

4. When indirect labor is used in production, the journal entry will be

5. Which of the following will be credited in the Work in Process Inventory?

Direct materials P4,200

Cost of Job 613:

Direct materials used P2,000

Cost of Job 613:

Budgeted direct labor P80,000

To compute for cost of Job 1118:

Actual overhead P30,000

Beginning inventory P25,000

What is the predetermined overhead rate?

Since the applied factory overhead is already given,

Direct materials 30,000

Beginning inventory P40,000

How much is transferred to finished goods?

Direct Materials 74,000

14. How much is the ending balance of Work in Process Inventory?

Overapplied/Underapplied = Applied Overhead – Actual Overhead

Applied Overhead = Predetermined rate * Actual Direct labor

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