Chapter 6: Job Order Costing

Exercise 6-1

A. Pre-determined OH rate = Budgeted Manufacturing OH / B

= 1280000/3200000
= 0.4 material cost

Pre-determined OH rate = Budgeted Manufacturing OH / B

= 2200000/400000
= 5.5 machine hours

Allocation Applied OH
B. Job 1 42000 * 0.4 16,800.00
17000 * 5.5 93,500.00
110,300.00

Job 2 164000 * 0.4 65,600.00

9000 * 5.5 49,500.00
115,100.00

Job 3 78000 * 0.4 31,200.00

5800 * 5.5 31,900.00
 63,100.00

C. Job 1 Job 2
Direct Materials 42,000.00 164,000.00
Direct Labor 32,000.00 26,000.00
OH Applied 110,300.00 115,100.00
Total Manufacturing Cost 184,300.00 305,100.00
Divide by: Units produced 5,000.00 7,000.00
Manufacturing Cost per Jo 36.86 43.59

D. Actual OH
Material 118,400.00
Machine 185,600.00 304,000.00
Less: Applied OH
Material 113,600.00
Machine 174,900.00 288,500.00
Underapplied OH 15,500.00
ed Manufacturing OH / Budgeted Production Activity
0/3200000
erial cost

ed Manufacturing OH / Budgeted Production Activity

0/400000
hine hours
 Job 3
78,000.00
36,000.00
63,100.00
177,100.00
10,000.00
17.71
 Exercise 6-2

A. Manufacturing Overhead - Assembly 960,000.00

Divided by: Direct Labor Hours - Ass 80,000.00
Predetermined Overhead rate - Assem 12.00

Manufacturing Overhead - Finishing 600,000.00

Divided by: Machine Hours - Finishin 75,000.00
Predetermined Overhead rate - Finishi 8.00

B. Overhead applied to production:

Assembly Department
Job Alpha ( 8000 x 12 ) 96,000.00
Job Beta ( 14000 x 12 ) 168,000.00
Job Charlie ( 9000 x 12 ) 108,000.00
Job Delta ( 6000 x 12 ) 72,000.00
Job Echo ( 4000 x 12) 48,000.00 492,000.00

Finishing Department
Job Alpha ( 6500 x 8 ) 52,000.00
Job Beta ( 11000 x 8 ) 88,000.00
Job Charlie ( 10000 x 8 ) 80,000.00
Job Delta ( 7500 x 8 ) 60,000.00
Job Echo ( 3000 x 8 ) 24,000.00 304,000.00
Total 796,000.00
C. Cost to Manufacture Each Job Job Alpha Job Beta
Assembly
Direct Materials 25,000.00 30,000.00
Direct Labor
Alpha ( 8000 x 5.5 ) 44,000.00
Beta ( 14000 x 5.5 ) 77,000.00
Charlie ( 9000 x 5.5 )
Delta ( 6000 x 5.5 )
Echo ( 4000 x 5.5 )
Factory Overhead 96,000.00 168,000.00
Total 165,000.00 275,000.00

Finishing
Direct Materials 12,000.00 25,000.00
Direct Labor
Alpha ( 1800 x 5.5 ) 9,900.00
Beta ( 2000 x 5.5 ) 11,000.00
Charlie ( 3500 x 5.5 )
Delta ( 3200 x 5.5 )
Echo ( 2800 X 5.5 )
Factory Overhead 52,000.00 88,000.00
Total 73,900.00 124,000.00

D.
Gross Profit (Sold at Cost + 40% mark - up)
Job Alpha Job Beta
Assembly 165,000.00 275,000.00
Finishing 73,900.00 124,000.00
Total 238,900.00 399,000.00
Add: Beginning Balance 35,000.00 50,000.00
Balance 273,900.00 449,000.00
Multiply by Mark-up (40%) 1.40 1.40
Sales Price 383,460.00 628,600.00
Less: Cost of Sales 273,900.00 449,000.00
Gross Profit 109,560.00 179,600.00
Job Charlie Job Delta Job Echo Total

40,000.00 50,000.00 25,000.00 170,000.00

49,500.00
33,000.00
22,000.00 225,500.00
108,000.00 72,000.00 48,000.00 492,000.00
197,500.00 155,000.00 95,000.00 887,500.00

30,000.00 2,000.00 5,000.00 74,000.00

19,250.00
17,600.00
15,400.00 73,150.00
80,000.00 60,000.00 24,000.00 304,000.00
129,250.00 79,600.00 44,400.00 451,150.00

Job Charlie Job Delta Job Echo Total

197,500.00 155,000.00 95,500.00 887,500.00
129,250.00 79,600.00 44,400.00 451,150.00
326,750.00 234,600.00 139,900.00 1,338,650.00
- - -
326,750.00 234,600.00 139,900.00 1,338,650.00
1.40 1.40 1.40
457,450.00 328,440.00 -
326,750.00 -
130,700.00 - - 419,860.00
 Exercise 6-3

A. July
Work in Process - Obama
Work in Process - Nixon
Work in Process - Bush
Total WIP, July
Less: Cost of Jobs Completed- Bush
Work in Process, end

August
Work in Process, beg
Add: Work in Process - Obama 44,000.00
Work in Process - Nixon 39,000.00
Work in Process - GMA 47,000.00
Work in Process - FVR 39,000.00
Total Work in Process, August
Less: Job Completed - Obama (52000+44000)
Work in Process, end

September
Work in Process, beg
Add: Work in Process - Nixon 30,000.00
Work in Process - GMA 45,000.00
 Work in Process - FVR 36,000.00
Total Work in Process, September
Less: Jobs Completed
Nixon ( 39000 + 41000 + 30000) 110,000.00
GMA (47000 + 45000) 92,000.00
Work in Process, end

B. July
Jobs Completed- July
Multiply : GP rate
Gross Profit, August

August
Jobs Completed- August
Multiply : GP rate
Gross Profit, September

September
Jobs Completed- September
Multiply : GP rate
Gross Profit, October
 52,000.00
41,000.00
12,000.00
105,000.00
12,000.00
93,000.00

93,000.00

169,000.00
262,000.00
96,000.00
166,000.00

166,000.00
111,000.00
277,000.00

202,000.00
75,000.00

12,000.00
0.40
4,800.00

96,000.00
0.40
38,400.00

202,000.00
0.40
80,800.00
Exercise 6-4

Raw Materials
Beg. Bal.- 100,000 500,000 - Issued
Purchases - 650,000
End. Bal. - 250,000

Work in Process
Beg. Bal.- 232,000 1,057,000 - Completed
Materials- 475,000
Direct Labor- 250,000
Overhead- 375,000
End. Bal - 250,000

Finished Goods
Beg. Bal. - 720,000 1,349,500 - Jobs Sold
Completed-1,057,000
End. Bal- 427,500

Cost of Sales
Jobs Sold- 1,349,500

Manufacturing Overhead
Indirect Mat. - 25,000 350,000 - Applied OH
Indirect Labor-75,000
Insurance - 30,000
Rent - 60,000
Maintenance - 12,000
Electricity - 36,000
Tax&Licenses-12,000
Misc. Cost - 20,000
Overapplied - 105,000
Job 500 - Sold

Beginning Balances
Add: Direct Materials (500,000 x 25%)
Direct Labor (250,000 x 25%)
Factory Overhead (62,500 x 140%)
Total

Job 600 - Completed and in the warehouse

Beginning Balances
Add: Direct Materials (500,000 x 30%)
Direct Labor (250,000 x 30%)
Factory Overhead (75,000 x 140%)
Total

Job 700 - Unfinished

Direct Materials (500,000 x 25%)

Direct Labor (250,000 x 20%)
Factory Overhead (50,000 x 140%)

Job 800 - Sold

Direct Materials (500,000 x 15%)

Direct Labor (250,000 x 25%)
Factory Overhead (50,000 x 140%)

2.) (a.) Direct Materials (500,000 x 95%)

Direct Labor
Factory Overhead (250,000 x 140%)
Total Factory Cost

(b.) Work in Process, beginning

Add: Factory Cost
Total cost put into process
Less: Work in process, end
Cost of Goods Completed

(c.)
Balances
Divided by
Percentage
Multiply by Overapplied Overhead
Adjusted Amount

Cost of Goods Manufactured

Add: Finished Goods,beginning
Cost of Goods Available for Sale
Less: Unsold Job
Cost of Goods Sold
Less: Overapplied overhead
Cost of Sales - Adjusted
(d.) Work in Process, beginning
Add: Direct Materials
Direct Labor
Factory Overhead
Total
Less: Job Completed
Overapplied Overhead
Work in Process, end

Finished Goods, beginning

Add: Jobs Completed
Total
Less: Jobs Sold
Job 500
Job 600
Job 700
Job 800
Balance
Less: Overapplied Overhead
Finished Goods, end

Beginning Balance
Add: Raw Materials Purchased
Total
Less: Materials used in production
Raw Materials, end
 Manila Manufacturing Company
Statement of Cost of Goods Manufactured and S
For the month ended September 20, 2020

Work in Process,beginning
Add: Direct Materials
Direct Labor
Factory Overhead
Total Cost Put into Process
Less: Work in Process,end
Cost of Goods Manufactured
Add: Finished Goods,beginning
Less: Finished Goods,end
Cost of Goods Sold
Direct Materials Direct Labor Factory Overhead
22,000 48,000 72,000
125,000
62,500
87,500
147,000 110,500 159,500

Direct Materials Direct Labor Factory Overhead

15,000 30,000 45,000
150,000
75,000
105,000
165,000 105,000 150,000

Direct Materials Direct Labor Factory Overhead

125,000
50,000
70,000

Direct Materials Direct Labor Factory Overhead

75,000
62,500
 70,000

475,000
250,000
350,000
1,075,000

232,000
1,075,000
1,307,000
250,000
1,057,000

Work in Process Finished Goods Cost of Sales

250,000.00 427,500.00 1,374,500.00
2,052,000.00 2,052,000.00 2,052,000.00
0.1218 0.2083 0.6698
105,000 105,000 105,000
12,789 21,872 70,329

1,057,000
720,000
1,777,000
427,500
1,349,500
70,329
1,279,171
 232,000
475,000
250,000
350,000 1,075,000
1,307,000
1,057,000
12,789
237,211

720,000
1,057,000
1,777,000

417,000
420,000
245,000
207,500 1,289,500
427,500
21,872
405,628

100,000
650,000
750,000
500,000
250,000
nila Manufacturing Company
Cost of Goods Manufactured and Sold
month ended September 20, 2020

232,000
475,000
250,000
350,000 1,075,000
1,332,000
237,211
1,094,789
720,000
405,629
1,409,160
Exercse 6-5

Work in Process, beginning

Less: Direct Materials (6000+8000)
Direct Labor (3,000+2,500 )
Factory Overhead
Divide by: Direct Labor
Overhead Rate

Direct Materials Issued to Production

Job 101 - 3000
Job 102 - 2000
Job 103 - 6000
Job 104 - 4500

Add: Raw materials, End

Less: Raw materials, beginning
Raw materials Purchased
 Entries

1. Raw Materials Inven

22,800 Cash
14,000
5500 2. Work in Process-D
3300 RMI
5500
0.6 3. Factory Payroll
Cash

4. Work In Process- D
Factory Payroll

5. Finished Goods
15500 Work In Process

18000
15000
18500
 18500
18500

15500
15500

7500
7500

7500
ry Payroll 7500

32440
In Process 32440