Job Order Costing Exercises:

Exercise 1--Cost accumulation Procedure Determination

Exercise 2--Job order cost sheet

Exercise 3--Job order costing

Exercise 4--Job Order Cycle Entries

Exercise 1--Cost accumulation procedure determination:

Classify these industries with respect to the type of cost accumulation procedure generally used--job
order costing or process costing.
a. Meat
b. Sugar
c. Steel
d. Breakfast cereal
e. Paper boxes
f. Wooden furniture
g. Toys and novelties
h. Coke
i. Cooking utensils
j. Caskets

k. Pianos
l. Linoleum
m. Leather
n. Nylon
o. Baby foods
p. Locomotives
q. Office machines
equipment
r. Luggage
s. Paint
t. Tires and tubes

Solution:

Job order cost procedure: (e), (f), (g), (i), (j), (k), (p), (q), (r)

Process costing procedure: (a), (b), (c), (d), (h), (l), (m), (n), (o), (s), (t)

Exercise 2--Job order cost sheet:

Forge Machine Works collects its cost data by the job order cost accumulation procedure. For Job 642,
the following data are available:

Direct Materials

Direct Labor

9/14 Issued
$ 1,200Week of Sep. 20
9/20 Issued
662Week of Sep. 26
9/22 Issued
480
Factory overhead applied at the rate of $3.50 per direct labor hour.

180 hrs @ $6.20/hr

140 hrs @ $7.30/hr

Required:

1. The appropriate information on a job cost sheet.

2. The sales price of the job, assuming that it was contracted with a markup of 40% of cost.

Solution:
1.
Forge Machine Works
Job Order Cost Sheet--Job 642
Direct materials
Date
Issued
9/14
9/20
9/22

Amount
$1,200
662
480

Direct labor
Date (Week
of)
9/20
9/26

Applied factory overhead

Hours

Rate

Cost

180
140

$6.20
7.30

$1,116
1,022

Date (Week
of)
9/20
9/26

Hours

Rate

Cost

180
140

$3.50
3.50

$630
490

--------

----------

----------

$2,342
=====

$2,138
======

$1,120
======

2.
Sales Price of job 642, contracted with a markup of 40% of cost:
Direct materials
Direct labor
Applied factory overhead

$2,342
2,138
1,120

Total factory cost

Markup 40% of cost

$5,600
2,240
------$7,840
=====

Exercise 3--Job order costing:

The Cambridge Company uses job order costing. At the beginning of the May, two jobs were in process:
Job 369
Job372
Materials
$ 2,000
$ 700
Direct labor
1,000
300
Applied factory overhead
1,500
450
There was no inventory of finished goods on May1. During the month, Jobs 373, 374, 375, 376, 378, and 379
were started.
Materials requisitions for May totaled $13,000, direct labor cost, $10,000, and actual factory overhead,

$16,000. Factory overhead is applied at a rate of 150% of direct labor cost. The only job still in process at the
end of May is No. 379, with costs of $1,400 for materials and $900 for direct labor. Job 376, the only finished
job on hand at the end of May, has a total cost of $2,000.
Required:

1. T accounts for work in process, finished goods, cost of goods sold, factory overhead control, and
applied factory overhead.

2. General journal entries to record: (a) Cost of goods manufactured (b) Cost of goods sold
(c) Closing of over or under applied factory overhead to cost of goods sold.

Solution:
1.
T accounts

Work in Process
Cost of Goods Sold
May 1
Balance:
No. 369
No. 372

To finished
goods
4,500
1,450

Materials

13,000

Direct labor

10,000

Factory
overhead

15,000

May 31
Balance:

43950
3650*

40,300 From
finished
goods
Under
applied
overhead

38,300

1,000
39,300

Applied Factory Overhead

15,000

15,000

No.379
Finished Goods
*$1,400 + $900 + ($900 150%)

Factory Overhead Control

16,000

15,000
1,000
16,000

From work
To cost of
in process 40,300 goods sold
38,300

May 31
Balance:
No.376

2,000

2.
General journal entries to record:
Cost of goods manufactured:
Finished goods
Work in process
Cost of goods sold:
Cost of goods sold
Finished goods
Closing of underapplied factory overhead to cost of
goods sold:
Cost of goods sold
Factory overhead control

Dr
40,300

Cr
40,300

38,300
38,300
1,000
1,000

Exercise 4--Job Order Cycle Entries:

Beaver, inc. provided the following data for January, 19B:
Materials and supplies:
Inventory, January 1, 19B
$10,000
Purchases on account
30,000
Labor:
Accrued, January 1, 19B
3,000
Paid during January (ignore payroll taxes)
25,000
Factory overhead costs:
Supplies (issued from materials)
1,500
Indirect labor
3,500
Depreciation
1,000
Other factory overhead costs (all from outside suppliers on
14,500
account)
Work in process:
Job1
Job2
Job3
Total
Work in process January 1,
$ 1,000
--$ 1,000
19B
Job costs during January,
19B:
Direct materials
4,000
$6,000
$5,000
15,000
Direct labor
5,000
8,000
7,000
20,000
Applied factory overhead
5,000
8,000
7,000
20,000
Job 1 started in December, 19A, finished during January, and sold to a
customer for $21,000 cash
Job 2 started in January, not yet finished.
Job 3 started in January, finished during January, and now in the
finished goods inventory awaiting customer's disposition
Finished goods inventory January 1, 19B.
Required:

Journal entries, with detail for the respective job orders and factory overhead subsidiary records, to to
record the following transactions for the January:

1. Purchase of materials on account.

2. Labor paid.
3. Labor cost distribution.
4. Materials issued.
5. Depreciation for the month.
6. Acquisition of other overhead costs on credit.
7. Overhead applied to production.
8. Jobs completed and transferred to finished goods.
9. Sales revenue.
10. Cost of goods sold.

Solution:
Journal Entries:
Subsidiary
Record
1 Materials

Debit
30,000

Accounts payable

30,000

2 Accrued payroll

25,000

Cash

25,000

3. Factory overhead control

Indirect labor

3,500
3,500

Work in process (WIP)

20,000

Job1

5,000

Job2

8,000

Job3

7,000
Payroll

23,500

4. Work in process
Job1

Credit

15,000
4,000

Job2

6,000

Job3

5,000

Factory overhead control

Supplies

1,500
1,500

Materials

16,500

5 Factory overhead control

Depreciation

1,000
1,000

Accumulated Depreciation

1,000

6 Factory overhead control

Other factory overhead costs

14,500
14,500

Accounts payable

14,500

7 Work in process

20,000

Job1

5,000

Job2

8,000

Job3

7,000

Factory overhead control (or

applied factory overhead)

20,000

8 Finished goods

34,000

Work in process (WIP)

34,000

Job1

15,000

Job3

19,000

9 Cash

21,000
Sales

10 Cost of goods sold

Finished goods

21,000
15,000
15,000