Question 9.

Student may use the job order cost sheet in the text book to complete this question.

Job Z101 Forming department Direct material Direct labour Manufacturing overheads Finishing department Direct material Direct labour Manufacturing overheads Total cost R4,975 R1,875 R1,550 R1,550 R800 R500 R200 R100 R5,775

Allocation rate

100%

50%

Sales - Production cost Direct material Direct labour Manufacturing overheads Gross profit

R7,000 R5,775 R2,375 R1,750 R1,650 R1,225

Question 9.2

(a) (b)

D A

R2 500 + R750 + (60 x R5) R3 550 100 units

Q9.1 - 9.2

Page 1 of 14

Question 9.3

(a) WIP 1 February Direct material Direct labour Manufacturing overheads absorbed Production cost during February Direct material Direct labour Manufacturing overheads absorbed Production cost of completed jobs

Job S201 R4,050 R800 R2,500 R750 R3,080 R1,000 R1,600 R480 R7,130

Job S202 R3,800 R1,200 R2,000 R600 R4,400 R1,800 R2,000 R600 R8,200

Absorption rate (of labour cost)

30%

30%

(b) WIP 1 February Direct material Direct labour Manufacturing overheads absorbed Production cost during February Direct material Direct labour Manufacturing overheads absorbed Value of WIP 29 Feb 20X5

Job S203 R2,950 R1,000 R1,500 R450 R2,560 R1,000 R1,200 R360 R5,510

Absorption rate (of labour cost) Q9.3 Page 2 of 14

30%

Question 9.4

MOH = Manufacturing Overheads (a)

JOB Rate per hour Hours MOH absorbed

K311 K312 K313

R3.700 R3.700 R3.700

1,480 1,230 860

R5,476 R4,551 R3,182 R13,209

Normal cost per job: Direct material Direct labour Manufacturing overheads absorbed Total cost

Job K311 R15,260 R17,250 R5,476 R37,986

Job K312 R21,340 R13,550 R4,551 R39,441

Job K313 R8,890 R10,100 R3,182 R22,172

(b)

Actual manufacturing overheads Absorbed / Applied MOH (Over) / Under absorbed MOH

R12,980 R13,209 (R229)

Q9.4

Page 3 of 14

Question 9.5

(a)

Budgeted manufacturing overheads Budgeted capacity (labour hours) = Allocation rate per labour hour

R27,000 600 R45.000

Job 1 Direct labour hours 249

Job 2 273

Direct material Direct labour Manufacturing overheads absorbed Cost of completed Job no 1 Cost of WIP Job no 2

R16,950 R12,450 R11,205 R40,605

R17,360 R13,650 R12,285 R43,295

Q9.5

Page 4 of 14

(b)

Actual manufacturing overheads Absorbed / Applied MOH (Over) / Under absorbed MOH

R20,490 R23,490 (R3,000)

Units completed - Job 1 Cost per unit produced

300 R135.350

Units sold - Job 1 Selling price per unit

200 R130.000

Job 1 Sales - Cost of goods sold Production cost for 200 units (Over) / Under absorbed MOH Profit on sale of 200 units R26,000 R24,070 R27,070 (R3,000) R1,930

Q9.5

Page 5 of 14

Question 9.6

(a)

Budgeted manufacturing overheads Budgeted capacity (machine hours) = Allocation rate per machine hour

R50,000 8,000 R6.250

(b) WIP balance 1 December Cost incurred during December Direct material Direct labour Manufacturing overheads absorbed Total cost

Job 77 R6,000 R4,075 R1,200 R1,000 R1,875 R10,075

Job 79 R2,500 R2,450 R800 R400 R1,250 R4,950

Job 73 R1,500 R1,525 R650 R250 R625 R3,025

Machine hours utilised per job

300

200

100

Dec 1 Balance b/d

Work in process - Job 77 R6,000 R1,200 R1,000 R1,875 R10,075 R10,075 Dec 31 Finished goods R10,075

Dec 31 Material control Wages control Manufacturing overheads control

Work in process - Job 79 Dec 1 Balance b/d R2,500 R800 R400 R1,250 R4,950 Jan 1 Balance b/d R4,950 R4,950 Dec 31 Balance c/d R4,950

Dec 31 Material control Wages control Manufacturing overheads control

Q9.6

Page 6 of 14

Work in process - Job 73 Dec 1 Balance b/d R1,500 R650 R250 R625 R3,025 Jan 1 Balance b/d R3,025 R3,025 Dec 31 Balance c/d R3,025

Dec 31 Material control Wages control Manufacturing overheads control

(d)

Calculation of (over) / under absorbed overheads: Actual manufacturing overheads Absorbed / Applied MOH (Over) / Under absorbed MOH R5,000 R3,750 R1,250

(e)

Cost of goods sold Manufacturing overheads control (Record under absorbed manufacturing overheads charged agains cost of goods sold).

R1,250 R1,250

Q9.6

Page 7 of 14

Question 9.7 (a) Factory absorption rate per direct labour hour Job Z10 Direct labour hours used WIP balance 1 Jan 20X8 Cost incurred during Jan 20X8 Direct material Direct labour Factory overheads absorbed Cost of completed jobs Cost of WIP (b) Journal entries: WIP - Job Z11 WIP - Job Z12 WIP - Job Z13 Material control (Material issued to jobs) Manufacturing overhead control Material control (Indirect material issued to jobs) WIP - Job Z10 WIP - Job Z11 WIP - Job Z12 WIP - Job Z13 Wages control (Direct labour used in jobs) Manufacturing overhead control Wages control (Indirect labour used in jobs) R6,000 R6,000 R5,000 R2,000 R10,000 R8,000 R25,000 R4,000 R4,000 R15,000 R8,000 R19,000 R42,000 550 R20,000 R9,125 R0 R5,000 R4,125 R29,125 Job Z11 270 R20,000 R19,025 R15,000 R2,000 R2,025 R39,025 R7.500 Job Z12 1,200 R10,000 R27,000 R8,000 R10,000 R9,000 R37,000 R33,000 Job Z13 800 R0 R33,000 R19,000 R8,000 R6,000

Q9.7

Page 8 of 14

WIP - Job Z10 WIP - Job Z11 WIP - Job Z12 WIP - Job Z13 Manufacturing overhead control

R4,125 R2,025 R9,000 R6,000 R21,150

(Manufacturing overheads absorbed at R7.50 per direct labour hour). Finished goods WIP - Job Z10 WIP - Job Z11 WIP - Job Z12 (Record cost of jobs completed) Cost of goods sold Finished goods (Record cost of jobs sold Z10 + Z11) Manufacturing overhead control Creditors control (or Bank) (Manufacturing overheads incurred) c. 31/1 Material control Wages control Creditors control (or Bank) Manufacturing overheads control R4,000 R6,000 R15,000 31/1 WIP Z10 WIP Z11 WIP Z12 WIP Z13 Cost of goods sold R25,000 R4,125 R2,025 R9,000 R6,000 R3,850 R25,000 R15,000 R15,000 R68,150 R68,150 ######## R29,125 R39,025 R37,000

The balance of R3 850 in the factory overheads control account represents the under-absorbed overheads for the month. At the end of each month, or if the firm so prefers, only at the end of the year, this amount will be transferred to the cost of goods sold account in order to establish the actual cost of the goods sold during the month or year.

Q9.7

Page 9 of 14

Question 9.8 (a) Budgeted manufacturing overheads Budgeted capacity (machine hours) = Allocation rate per machine hour R48,000 3,200 R15.000 QTY 40 150 200 Cost per unit R105.000 R16.000 R15.000 Total R4,200 R2,400 R3,000 R9,600

(b) Direct material Direct labour Manufacturing overheads absorbed Total cost

Work in Process Control Material control R4,200 Finished goods control Wages control R2,400 Manufacturing overhead control R3,000 R9,600

R9,600

R9,600

Creditors control (or Bank)

Manufacturing overheads control R3,300 WIP control Cost of goods sold R3,300

R3,000 R300 R3,300

WIP control

Finished goods control R9,600 Cost of goods sold

R9,600

Finished goods control Manufacturing overheads control

Cost of goods sold R9,600 R300 R9,900

(d)

Sales Cost of goods sold Gross profit

R10,500 R9,900 R600

Q9.8

Page 10 of 14

Question 9.9

(a)

Budgeted manufacturing overheads Budgeted capacity (labour hours) = Allocation rate per labour hour

R90,000 22,500 R4.000

Job A98 Machine hours utilised per job Manufacturing overheads applied 1,075 R4,300

Job B101 1,350 R5,400

WIP - Job A98 Material control Wages control Manufacturing overheads control

R23,400 R6,200 R12,900 R4,300

WIP - Job B101 Material control Wages control Manufacturing overheads control

R31,100 R9,500 R16,200 R5,400

Finished goods control WIP - Job A98

R23,400 R23,400

Q9.9

Page 11 of 14

Question 9.10 (a) Cost centre A Budgeted manufacturing overheads Budgeted capacity (machine hours) = Allocation rate per machine hour Cost centre A Budgeted manufacturing overheads Budgeted capacity (machine hours) = Allocation rate per machine hour Cost centre C Budgeted manufacturing overheads Budgeted capacity (labour hours) = Allocation rate per labour hour R40,964 41,800 R0.980 QTY Direct material used Direct material requisitioned Direct material returned Direct labour Cost centre A Cost centre B Cost centre C Hire machine Manufacturing overheads absorbed Cost centre A Cost centre B Cost centre C Production cost Non production cost Administrative and general overheads Selling and distribution overheads Total cost Selling price Profit 411 657 279 R1.750 R3.800 R0.980 146 39 279 R4.800 R5.700 R6.100 Cost per unit Total R6,740.50 R6,780.10 (R39.60) R2,625.00 R700.80 R222.30 R1,701.90 R59.00 R3,489.27 R719.25 R2,496.60 R273.42 R12,913.77 R3,355.38 R1,291.38 R2,064.00 R16,269.15 R17,200.00 R930.85 R75,088 19,760 R3.800 R38,500 22,000 R1.750

Q9.10

Page 12 of 14

Question 9.

Question 9.