1st Term, A.

Y 2020 - 2021
COST ACCOUNTING AND CONTROL

Topic 3: Job Order Costing

Self-Review Test

NAME: (surname first)______________________________ SCORE:__________________

YR./ SEC.: _________________ DATE:
___________________

General Instruction: Write your answer on the space provided for each item. (The
Self-Review Test is not recorded)

Part I.
Job Order Cost Schedule. Winkel Woodcrafters produces special-order wood products.
The company uses job order costing for pricing and cost accumulation purposes. The
following costs were incurred on two recent jobs:

Cost Item Job Pine-20 Job Birch-10

Direct materials:
Issued $6,500 $8,000
Returned 500 0
Indirect materials used 500 400
Direct labor $9,000 $15,000
Direct labor rate $9 per hour $10 per hour
Overhead application rate hour $10 per direct labor $15 per direct
hour labor

The company adds a 50% markup on cost in determining the amount to charge for each job.
Required: Prepare a schedule showing the cost and the amount to be charged for each job.

SOLUTION
Job Pine-20 Job Birch-10
Direct materials $ 6,000 $ 8,000
Direct labor 9,000 15,000
Factory overhead applied 10,000 22,500
Total $ 25,000 $ 45,500
Allowance for profit and other costs 12,500 22,750
Amount to be charged $ 37,500 $ 68,250

Part II.
Job Order Cost Sheet; Over- or Underapplied Overhead. During June, the following
transactions took place at the Cassandra Corp.

1
 June 3 Purchased materials, $30,000.
5 Requisitioned materials from inventory, $20,000 (75% of these were direct;
25% were indirect). Direct materials of $3,000 and indirect materials of
$1,000 were for Job 00-1. The remainder were for Job 00-2.
7 For Job 00-2, returned $150 of direct materials and $200 of indirect
materials.
8 Recorded liabilities for payroll: direct labor, $15,000 and indirect labor,
$5,000. Of the direct labor cost, 60% was for Job 00-1; the remainder was
for Job 00-2.
10 Incurred other factory overhead costs, $20,000 (all applicable to Jobs 00-1
and 00-2).
14 Applied overhead at the rate of 200% of direct labor cost to Jobs 00-1 and
00-2, which were completed and transferred to finished goods account
today.

Required: Assuming that Jobs 00-1 and 00-2 were the only jobs during the period and that
all overhead (as recorded above) is the total applicable overhead for these projects:
(1) Prepare a job order cost sheet for each job.
(2) Determine the difference between applied and actual overhead for the month.

SOLUTION
(1)
Job 00-1 Job 00-2
Materials $3,000 $ 11,850
Labor 9,000 6,000
Overhead applied 18,000 12,000
Total cost $30,000 $29,850

(2) Analysis of Factory Overhead

Incurred:
Indirect materials 4,800
Indirect labor 5,000
Other overhead incurred 20,000 $29,800
Applied:
Job 00-1 $18,000
Job 00-2 12,000 30,000
Amount overapplied $(200)

Part III.
Job Order Cycle Entries. The following completed cost sheets were prepared for three
jobs that were in production during April in the Special Order Division of Byron Company:

COST ACCOUNTING AND CONTROL 2

 Job 097 Job 781 Job 946
Direct materials $ 6,000 $2,700 $4,100
Direct labor 9,200 7,300 8,200
Applied factory overhead 6,900 5,475 6,120
Allowance for commercial expenses and 11,050 7,738 9,210
profit

On April 1, Job 097 was 75% complete as to materials, labor, and overhead. It was finished
during the month. The other jobs were started and finished during the month. Jobs 097 and
946 were sold on account at the end of the month.

Required: Prepare general journal entries to be recorded in April to accumulate these job
costs for Work in Process as well as for Finished Goods and for the sale of the two jobs.

SOLUTION
Debit Credit
Work in Process 8,300
Materials 8,300
(.25 x $6,000) + $2,700 + $4,100

Work in Process 17,800

Accrued Payroll 17,800
(.25 x $9,200) + $7,300 + $8,200

Work in Process 13,320

Factory Overhead Control 13,320
(.25 x $6,900) + $5,475 + $6,120

Finished Goods 55,995

Work in Process 55,995

Cost of Goods Sold 40,520

Finished Goods 40,520

Accounts Receivable 60,780

Sales 60,780

Part IV.
Manufacturing costs. The work in process account of Meyers Company showed:

COST ACCOUNTING AND CONTROL 3

 Work in process
Materials 22,000 Finished goods $68,000
Direct labor 37,000
Factory overhead 55,500

Materials charged to the one job still in process amounted to $5,000. Factory overhead is
applied as a predetermined percentage of direct labor cost.

Required: Compute the following:

(1)The amount of direct labor cost in finished goods.

(2)The amount of factory overhead in finished goods.

SOLUTION
(1) The amount of direct labor in finished goods:
Finished goods................................................................................................. $68,000
Materials included in finished goods................................................................. 17,000
Direct labor and factory overhead in finished goods......................................... $51,000

¿ 55,500
Factory overhead charged ¿ work ∈ process work∈ process ¿= =1.5
Direct labor charged ¿ 37,000
51000 x 37000/92500 = 20400 DL
51000 x 55500/92500 = 30600 FOH

(2) The amount of factory overhead in finished goods:

x = $20,400
1.5x = 1.5($20,400)
1.5x = $30,600 factory overhead in finished goods

Part V.

COST ACCOUNTING AND CONTROL 4

Manufacturing Costs. Teddy Company is to submit a bid on the production of 5,500 vases.
It is estimated that the cost of materials will be $8,500, and the cost of direct labor will be
$12,000. Factory overhead is applied at 50% of direct labor cost in the Molding Department
and at $7.50 per direct labor hour in the Finishing Department. Of the above direct labor, it
is estimated that 500 direct labor hours at a cost of $4,000 will be required in Finishing. The
company wishes a markup of 100% of its total production cost.
Required: Determine the following:
(1) Estimated cost to produce.
(2) Estimated prime cost.
(3) Estimated conversion cost.
(4) Bid price.

SOLUTION
(1)
Materials $8,500
Direct labor 12,000
Factory overhead:
Molding (50% x $8,000) 4,000
Finishing (500 DLH x $7.50) 3,750
Estimated cost to produce $28,250

(2)
Materials $8,500
Direct labor 12,000
Estimated prime cost $20,500

(3)
Direct labor $12,000
Factory overhead 7,750
Estimated conversion cost $19,750

(4)
Estimated cost to produce $28,250
Markup ($28,250 x 100%) 28,250
Bid price $56,500

COST ACCOUNTING AND CONTROL 5