C0ST

ACCOUNTING &
CONTROL
2019 Edition

GLORIA ARDANIEL RANTE

CPA, DBA
 CHAPTER 6
Job Order
Costing System

LEARNING OUTCOMES

After this chapter, the learner will be able to:

Describe important features of job order manufacturing.

Explain job cost sheets and how they are used in job order cost

accounting.
Describe the flow of material costs, labor costs and overhead costs in job

order cost accounting

Journalize the flow of costs using actual, normal and standard costing
Apply multiple overhead allocation rates in assigning overhead to
products.

Account for production losses (Generally anticipated to occur in all jobs

and specific to a job)
Prepare Statement of Cost of Goods Manufactured and Sold
 Order Costing
Chapter 6 Job

COSTING SYSTEM
NATURE OF JOB ORDER
accumulated byajobs orlofmakin
cost system, costs are ajobas basa,
With ajob order
the total costs of manufacturing
determine As job is performed, the costs directmaterialsand 6 the
of
iteasierto
selling price. while the cost of
desired individual jobs in process
labor are traced the method.
to

allocated based on the

most appropriate
or by order in
accordancewithCuStome,
batch
incurred and overhead
by
Each job is prepared labor aPplied
of materials used, a Job CoslSheetfor
Thecost
specifications.in a Work inProcess Account while maintaining
summarized subsidiary ledger forthejobsinProceso
cost sheet serves as the compared with thebalanceof the
each job. The job are periodically
Postings to thejob cost sheets that the two are
balanced.
account to ensure
Work in Process

SOURCE DOCUMENTS
costincurred to manufachwe.
Cost Sheet. The job cost shows the total
sheet following:
Job
contains the
particular orderand itNumber
a. Job

b. Job Description
of customer
Name and address
and date of delivery
C.

d. Date ordered section showing

e. Direct materials of materials used
e.1. description used
quantity of materials
e.2
e.3 cost of
materials
showing
f. Direct labor section
of hours worked
f.1 the no.
f.2 the rate per
hour
of direct labor
£.3 the total cost
g. Overhead section

sheet ispresented on the other page:

An example of a jobcost
 199
6 - Job Order Costing
chapter

job
Cost Sheet
Units Job Description
Job No.
Date Started Customer
Date Completed Address

Direct Materials
Date Req. No. Quantity Unit Cost Amount

Direct Labor
Date Hours Rate Amount

Manufacturing Overhead
Date Cost Driver Qty. OH Rate Amount

Cost Summary
P000,000
Direct material cost
000,000
Direct labor cost
000,000
Manufacturing Overhead
P000,000
Total Manufacturing Cost

of materials, labor
The job cost sheet may also include the budgeted cost the actual
and overhead to make it easier for the production manager to compare

results with the established standard cost for effective control.

Materials Requisition Slip

the materials issued to production.

Material Requisition Slip supports
A

When materials are put into the work in process inventory, a materials requisition
slip is completed and this form shows the description, the quantity and the unit
material
no
tost of materialls issued to a particular job. For proper internal control,
authority approves the
should be released from the stockroom unless the proper
redease of materials through a material requisition form.
 200
Chapter 6 - Job Order Costing

Material Requisition Slip No.

Diamond Manufacturing Company
Date:
To:

Unit Price Amount

Quantity Description
100 gal. Adhesive Grade 102 P2.50 P250.00

Approved by Issued by

Charged to Job No. Received by

Ilustration - Cost accounting cycle using actual costing and normal costing
At the beginning of the year, Primer Manufacturing Company had the following
balances in its inventory accounts:
Raw materials
P100,000
Work in process
Finished goods 232,000
720,000
The work in
process subsidiary ledger shows the following balances:
Job No. Materials Labor Overhead
500
P22,000
600 P48,000 P72,000
15,000
Total 30,000 45,000
P37,000
P78,000 P117,000
The finished goods
P320,000 and Job 300 with ainventory contains Job 400 with a total cost of
total cost of P400,000.
Summary oftransactions for the
3-months ended March 31, of the current year are
a. Raw materials
purchased on cash, P450,000.
b.
Materials issued to production,
Job. 500 P400,000, distributed as
(20%), Job 600 (25%), Job follows:
representfactory 700 (30%), Job 800(15%)
supplies consumed. andthe balance
Chapter 6 - Job Order Costing
201

for the period:

Labor costs
Direct labor - P200,000 distributed
as follows: Job 500 (25%); Job 600 (30%);
Job 700(20%) and the balance to Job 800
Indirect labor - P75,000
Selling and administrative
expenses - P125,000.
d.
Administrative expenses and Manufacturing overhead incurred other than
indirect materials and indirect labor follows:
Factory insurance expired P30,000
Factory rent 60,000
Factory maintenance 12,000
Office equipment maintenance 5,000
Electricity costs, 60% to factory, 40% to
selling and administration 60,000
Taxes & Licenses, 60% to factory, 40% to
selling & administration 20,000
Miscellaneous factory costs 20,000

Additional information:
a. Actual costing: Actual Overhead was applied to production on the
basis of direct labor costs.

b. Normal costing: Overhead is applied to the job (based on direct labor

costs) and the overhead variance is closed to cost of sales.

600 is in
c. Only Job No. 700 is unfinished at the end of the period. Job.
the warehouse and all others were sold at production cost plus 40%
mark-up on a 30-day term.

Required:
Give all the entries required to record the above

and to individual job cost sheet and

b. Post directly to the general ledger accounts
determine the balances of the following accounts at the end of the quarter:
Raw Materials inventory
Work in process inventory
Finished goods inventory

C. Prepare formal statement of Cost of Goods manufactured and Sold

 202
6 - Job Order
Costing
Chapter

Solutions:

actual costing
(a) Journalizing transactions
Page1
Date Particulars
Debit
Credit
450,000
Raw Materials
Cash 450,000
Work in Process 360,000
Manufacturing Overhead 40,000
Raw Materials
[ob 500 - 80,000
400,000
600 - 100,000
700 - 120,000
800 - 60,000

Work in Process
200,000
Cash or Accrued Payroll
Job 500 - 50,000 200,000
Job 600 - 60,000
Job 700 - 40,000
Job 800 - 50,000

Manufacturing Overhead
Selling & Administrative 75,000
Cash or
expenses 125,000
Accrued Payroll
200,000
Manufacturing Overhead
Selling &
Administrative expenses 170,000
Cash 37,000
Work in 207,000
process
Manufacturing overhead 285,000
Job 500 -
71,250 285,000
Job 600 -
85,500
Job 700 -
Job 800 -
57,000
71,250
Actual overhead
applied to the
job
nupter
chapte
6 - Job Order Costing 203

Page 2

Particulars
Date Debit Credit
Finished Goods
860,000
Work in process
860,000
Completion of the following jobs:
Job 500 343,250
Job 600 335,500
Tob 800 - 181,250

Accounts Receivable
1,742,300
Sales
1,742,300
(1,244,500 * 140%)

Cost of sales 1,244,500

Finished Goods 1,244,500

Jobs sold:
Job at the beg 720,000
Job 500 - 343,250
Job 800 - 181,250
Total - 1,244,500

(b) Posting to the General Ledger and Job Cost Sheets

Raw Materials Inventory

Debit Credit Balance

Beg 100,000

Purchases 450,000 550,000

Issuance 400,000 150,000

Work in Process
Credit Balance
Debit
beg 232,000
Materials 592,000
360,000
Labor 792,000
200,000
Overhead 1,077,000
285,000
860,000 217,000
completion
 204
Order Costing
Chapter 6 - Job Chapter (
Credit Balance
Finished Goods Debit
720,000
Beg 860,000 1,580,000 Incurr
Completed 1,244,500 335,500 Tol
Sold

Manufacturing overhead Allocal

Debit Credit Balance Jobs!
Indirect mat.
40,000 40,000 job!
Indirect labor 75,000 115,000
Insurance 30,000 145,000
Rent 60,000 205,000
Maintenance 12,000 217,000
Electricity 36,000 253,000
Taxes 12,000 265,000
Misc. factory costs 20,000
285,000
Total OH applied 285,000

Job Cost Sheets

Job 500: completed and sold

Materials Labor Overhead Total
Beg. bal P22,000 P48,000 P72,000
Additions: P142,000
80,000 50,000
Total 71,250 201,250
343,250
(343,250)

Job 600:
Materials Completed and inthe warehouse
Beg, bal Labor
P15,000 Overhead Total
Additions: P30,000
Total 100,000 P45,000 P90,000
60,000
85,500 245,500
P335,500
(335,500)

Job 700:
Incurred: Materials
Labor
unfinished
120,000 Overhead
40,000 Total
57,000 P217,000
 6 - Job
OrderCosting 205

Chapter
Job 800:
completed and sold
Materials Labor Overhead Total
60,000 50,000
Incurred 71,250 P181,250
(181,250)

.iredthliureoes
praydiastedourhantbnedonAllocation Allocated amount

50/200 * 285,000 P71,250

Job 500
60/200 * 285,000 85,500
Job 600
40/200 285,000 57,000
Job 700 71,250
50/200 *285,000
Job 800 P285,000
Total

(c) Statement of Cost of Goods Manufactured

Primer Manufacturing Company

Statement of Cost of Goods Manufactured and Sold
For the period ended March 31, 2019
P232,000
Work in process beginning P360,000
Add: Direct Materials 200,000
Direct labor 285,000
Manufacturing overhead 845,000
P1,077,000
Total factory costs
217,000
goods put into process
Total cost of
P860,000
Less: Work in process end 720,000
Cost of goods manufactured
P1,580,000
Add: Finished goods, beg 335,500
Cost of goods available for sale 1,244,500
Less: Finished goods, end
Cost of sales

Normal Costing
and pormat costi n g method f
actualcosting methodapplied
is based

between the job

This method
dilfterenace
of

th andy
innormal
that, costingmethod,oftheoverhead
actual overhead incurred.
variance. At the end

Predetermined amount insteadto therecognition of overhead

the
with the overhead
applied
overhead mnay result
tpplying is compared
incurred
of a
period, theactual overhead
 Costing
Chapter 6 - Job Order

Manufacturing overhead Debit

Credit Balance

Charges: 40,000 40,000

Indirect mat. 75,000 115,000
Indirect labor 30,000 145,000
Insurance 205,000
60,000
Rent 217,000
12,000
Maintenance
36,000 253,000
Electricity 265,000
12,000
Taxes
20,000 285,000
Misc. factory costs 300,000
Total OH applied
(15,000)

resulted to a credit balance of P15,00

The manufacturing overhead account
the actual overhead incurred
because the applied overhead is greater than The
variance is then closed to cost of sales.

15,000
Manufacturing overhead
Cost of sales 15,000

Close Over applied OH to COS

PRODUCTION LOSSES IN JOB ORDER

In the process of production, some goods may be defective which require

additional reworking to make them good units and some may be spoiled. Spoiled
units cannot be reworked but they can be disposed of a very minimal market
value. The accounting for spoilage or defects in job order depends on the
following:

Is spoilage normally anticipated or common to all jobs?

Spoilage maybe considered a normal characteristic of a production cycle.

Because of this, manufacturing companies include a provision for normal
spoilage cost in its budgeted manufacturing overhead. The cost of normal
spoilage is then spread over all jobs in
process. If actual spoilage occurs
the entry would be:

Spoiled
goods (MV of spoiled units) 000
Manufacturing cverhend (unrecovered costs) 000
Finished goods (good units) 000
Work in process 000
 209
chapter 6 - Job Order Costing

If production results to
defective work, the entry would be:
Marifacturing overhead (cost of rework)
Raw materials
000
000
Accrued wages 000
Manufacturing overhead (applied) 000

Illustration: Spoilage common to all jobs

Belro Company presented you the following budgeted
information for the
current year.
Budgeted manufacturing overhead P1,000,000
Allowance for spoilage 50,000
Estimated labor hours at normal capacity 25,000
Pre-determined overhead rate 42.00/DLH

Belro Company accepted a job for 1,000 pieces of computer bags. The
manufacturing cost per unit of computer bag is as follows: Materials, P300; direct
labor (2.0 hours at P48.00 per hour), P96.00 plus overhead. At inspection, 50 pieces
are spoiled which can be sold at P200 per piece.

Production
Units Cost

Production cost per unit: 1,000 P480,000

Mat 300.00
96.00
OH 84.00
Total 480.00
(50) (24,000)
Spoiled units
950 P456,000
Good units

To record the cost of production:

480,000
Work in process (1,0001 480) 300,000
Materials 96,000
Factory payroll 84,000
Manufacturing overhead

To record the completion of the good units:

456,000
Finished Goods (950 x 480) 456,000
Work in Process
 210

Job Order
Costing
Chapter 6 -
units:
Torecord the
completion ofthe bad 10,000
14,000
(50 x 200)
Spoiled Goods • 280)
Manufacturing overhead (50. 24,000
in Process
Work
50

Units spoiled per unit P480

cost
X production
P24,000
spoiled unit
Total production cost of(50 x 200) 10,000
- Recoverable amount P14,000
Unrecovered cost
the market value of
account is charged with
The spoiled goods inventory
while the unrecovered cost is charged to manufacturing
the spoiled units
overhead account.

Illustration: Defective work

is defective. The cost to
Assuming the 50 pieces in the above example overhead.
rework a unit requires 30 min. of labor time plus
The cost of rework is calculated as follows:
P1,200
Labor (50 pieces x 30 min/60min 48) 1,050
Overhead (25hrs x 42)
2,250
Manufacturing overhead
1,200
Factory payroll
1,050
Manufacturing overhead

Since the predetermined overhead rate already includes an allowance for

spoilage, actual costs of rework are then charged to manufacturing
the
overhead account instead of work in process account.

Is spoilage specifically identified with a particular job?

If spoilage anddefects are occasionally experienced in production process,

then the allowance for spoilage should not be included in the computation
of predetermined overhead rate. Using the following data:
Budgeted manufacturing overhead P1,000,000
Allowance for spoilage 50,000
Estimated labor hours at normal capacity 25,000
Pre-determined overhead rate (if spoilage is 42.00/DLH
common to all jobs)
Chapter 6
job Order Costing 211

Predetermined OHrate (if spoilage is

with a particular job), as computed identified P40/DLH
below:
Budgeted MOH
Divide by: P1,000,000
25,000 DLH
Predetermined OH rate
P40/DLH
Illustration. Spoilage in
production process, specifically identified in a
particular job.

Belro Company accepted a job for 1,000 pieces of

computer bags. The
manufacturing cost per
unit of computer
direct labor (2.0 hours at P48.00
bag is as follows: Materials, P300;
per hour), P96.00 plus overhead. At
inspection, 50 pieces are spoiled which can be sold at P200 per piece.

Production
Units Cost
Production cost per unit 1,000 P476,000
Mat 300
96
OH 80
Total 376

Spoiled (50) (23,800)

Good 950 P452,201

The entry to record the cost of production, assuming the spoilage is normal:

476,000
Work in process
300,000
Materials
96,000
Factory payroll 80,000
Manufacturing OH
WIP - 1,000 x 476
MOH - 1,000 x 2 x 40

completion of the good

units:
To record the

452,200
Finished Goods 452,200
Work in Process
FG - 950 x 476
 212

Chapter 6 - Job Order Costing

To recordthecompletion ofthebadunits:
10,000
Spoiled Goods 13,800
Manufacturingoverhead 23,800
Work in Process
Spoiled goods - 50 x 200
MOH - 50 x 276

50
Unitsspoiled
unit P476
X production cost per
P23,800
Total production cost of spoiled unit
Recoverable amount (50: 200) 10,000
Unrecovered cost P13,800

The market value of the spoiled units is debited to Spoiled Goods

inventory account while the unrecovered cost is debited to
Manufacturing overhead.

Illustration. Spoilage due to customer's intervention

Sometimes, a customer may change the specifications of job order

causing for some spoilage. Since this is not a problem of quality control
but customer's action during the process, the customer will shoulder the
cost of reworking in case of defective jobs, or shoulder the lost in case of
spoilage. Using the same data above except that spoilage is caused by
customer's change in specification.

Total
Units Production
Cost
Production cost per unit: 1,000 P476,000
Materials 300.00
Direct labor 96.00
MOH
80.00
Total
476.00
Spoiled units
(50) (10,000)
Good units
950 P466,000

Units spoiled 50
X
production cost per unit P476
Total production cost of spoiled unit
Recoverable
P23,800
amount (50 x 200) 10,000
Unrecovered cost P13,800
 6 - Job Order Costing 213
chapter

To record the cost of production:

Work in process
Materials 476,000
300,000
Factory payroll
96,000
Manufacturing overhead
80,000
WIP - 1,000 x 476
MOH - 1,000 x 2 x 40=80,000

To record the completion of the process

Finished Goods 466,000

Spoiled goods 10,000
Work in Process 476,000

The market
value of the spoiled goods is debited to Spoiled Goods Inventory
account while the unrecovered cost of the spoiled units remains with the job.

work due to customer's intervention

Illustration. Defective

If such action of the customer results to a defective work, the customer is

charged to
charged with the cost of reworking. The cost of rework is then
work in process account.

1,200
Labor (50 pieces x 30 min/60 min x 48)
1,000
Overhead (25 hrs x 40)

2,200
Work in Process 1,200
Accrued Payroll 1,000
Manufacturing overhead
the cost of
by P2,200 because
The cost of the 1,000 units is increased
to the customer.
correcting the defect is charged
Total

Units Production
Cost
P476,000
1,000
Production cost per unit:
Mat 300.00
96.00
OH 80.00
476.00 2,200
Total
Defective job - rework P478,200_
1,000
Good units
 214

Chapter 6 - Job Order Costing

defective which is normal in
Assume the 50
units are any
Illustration.
production process.

In this situation, the cost

of reworking the defective units ischarged
to
basis of billing theclient is the originalcost
manufacturing overhead account. The
of production.
2,200
Manufacturing overhead
1,200
Accrued Payroll
1,000
Manufacturing overhead
Production
Units Cost

Production cost per unit: 1,000 P476,000

Mat 300.00
96.00
OH 80.00
Total 476.00
Defective job rework (no
effect on the cost of the job
Good units 1,000 P476,000

Illustration.
Assume the 50 units are defective due to employee's fault which
is abnormal.

siuation,
the cost of
In this account which
from Spoilage reworking defective units is charged to Loss
the
is a period cost.

Loss from spoilage

2,200
Accrued Payroll
1,200
Manufacturing overhead
1,000

STANDARD COSTINGIN JOBORDER

Standard cost in job order can be used if a
producing
fairly similar
Process Account products. When standard company typically engages in
cost is used, the Work
is
charged with the in

overheadand standard cost of

the pro-formavariances are recognized at an early point. materials, labor and
entries using standard
cost in job order:
The following illustrates
Transactions
Pro-forma Entries
a. Purchaseof
materials: Raw Materials
Materials price(AQx SP) 00
variance 000
 6 • Job Order Costing 215
Chapter

> SP Accounts Payable

(a) AP 000
RM - AQ x SP
000
AP - AQx AP

If Actual price is greater than standard

price, the material price variance is

(b) AP < SP Raw Materials 000

Material Price variance
Accounts Payable 00
If
actual price is less than standard
price, the material price variance is

(a) and (b), take note that the material price variance is recognized
In cases

al the timeof purchase. Material price variance may also be taken at the
time materials are issued to production.

2. Issuance of raw materials Work in process 00

a. AQ>SQ Material usage variance
Raw materials 000

WIP - SQ x SP
RM - AQ x SP

Work in process 000

b. AQ<SQ
Material usage variance
Raw Materials 00

WIP - SO x SP
RM - AQ x SP
3. Incurrence of DL
000
(a) payroll for the period Factory payroll (AH x AR)
00
Accrued wages (net)
WHT payable
SSS Premium Payable
Philhealth payable

00
Work in process
applied to
00
production Labor rate variance
00
Labor efficiency variance 000
Factory payroll 000
Fact payroll -AH x AR
WIP - SH x SR
 216
Order Costing
Chapter 6 - Job
overhead
Incurrence of various Manufacturing 000
4. Accounts Payable
overheads
Prepaid insurance 000
Accumulated 000
depreciation 000

Work in process 000

5, Overhead applied to
Manufacturing OH 000
production
WIP - SH x OH rate

6. Completion of jobs Finished goods 000

Work in process 000

7. Recognize variance in OH Overhead budget variance 000

Overhead volume variance 000

Manufacturing OH 000
Actual OH >
Applied
OH

Illustration: Job Order using standard cost

The Best Manufacturing Company uses standard costs with its job order ol
accounting system. During the third quarter of 2013,
an order of 4,000 units of
Product E-ho Job. 3-3008)
cost to produce a unit is
was accepted from
given below:
a longtime custorner. 1he standard
Direct materials - 3.0 Ibs at P8.00
per pound
Direct labor - 2 hours at P18 per hour
Overhead
- 2 hours (variable P6; Fixed P10)
Overhead is
applied production
capacity for the
to on the
basis of direct
quarter was 9,000 direct labor labor hours. Normal
During the quarter, the hours.
following transactions related
to the job occurred:
a.
Purchased 12,400
pound pounds of raw materials
b. Issued 12,400
on
account at P7.20 per
C.
Incurred 7,600pounds ofraw
hours of directmaterialsto production
d.
Manufacturing overhead labor at P18.40 per hour
e.
Applied overhead to incurred for the
f.
Transferredcompleted production. quartertotaled P135,300.
Billed the jobs to
customer at cost plusFinished Goods.
REQUIRED:Journal 60% mark-up
on cost.
entries torecordthe
above.
 - Job Order Costing
Chapter 6
217

Journal entries(standard costing)

Purchase of
a.

materials Raw Materials

99,200
Accounts Payable 89,280
Mat. Price variance
9,920
RM - 12,400 x 8
MPV - 12,400 x .80
1P - 12,400 x 7.20
b. Issuance of

materials Work in process

96,000
Mat usage variance 3,200
Raw Materials
99,200

RM - 12,400 x 8

Incurrence of
C.

labor Work in process 144,000

Labor rate variance 3,040
Labor efficiency variance 7,200
Accrued wages 139,840
WP - 8,000 x 18
LRV - 7,600 x .40
LEV - 400 x 18
Acc wages 7,600 x 18.40

d. Incurrence of
Manufacturing overhead 135,300
overhead
Various accounts 135,300

128,000
e. Overhead applied Work in process
128,000
Manufacturing OH
WIP - 4,000x2x16

368,000
f. Completion of the Finished Goods 368,000
process Work in process

588,800
8. Sale of goods Accounts Receivable 588,800
Sales
368,000
Cost of sales 368,000
Finished goods
 Order Costing
Chapter 6 - Job

-3-3003
Job Cost Sheet Overhead Total
Labor
Materials
Actual costs:
89,280
89,280 ] 139,840
12,400 x 7.20 139,840
7,600 x 18.40 135,300 135,300
139,840 135,300 364,420
89,280
Total actual costs
Standard costs:
Materials (SQ x SP) 96,000
96,000
4,000 x 3 = 12,000 x 8
Labor (SH x SR) 144,000
144,000
4,000 x 2 8,000 x 18
Overhead (SH x OH

rate) 128,000 128,000

4,000 x 2 = 8,000 x 16
144,000 128,000 368,000
Total standard costs 96,000

Variance (6,720) (4,160) 7,300 (3,580)

 er 5 - Job Order Costing 219
chapter

EXERCISES
Ex.
6-1. Determining manufacturing overhead rate
Manufacturing
Silver Man Company
material cost,
is based on
uses two rates to apply overhead to jobs.
the other on machine time The following
One rate

data is related
io the current year.

Costinformation Budget
Materials related overhead P1,280000
Machine related overhead 2,200,000
materials used on jobs
Cost of 3,200,000
Machine hours 400,000

Data related to three jobs worked on in July follow:

Job 01 Job 02
Cost elements Tob 03
Materials P42,000 P164,000 P78,000
Direct labor costs 32,000 26,000 36,000
Machine hours 17,000 9,000 5,800

Units produced 5,000 7,000 10,000

Actual material-related overhead was P118,400 and actual machine related

overhead was P185,600.

REQUIRED: Determine the following:

1) Predetermined overhead rate
2) Amount ofoverhead applied to each job
3) Manufacturing costs per job
4) Overhead variance

Ex. 6-2. Departmental Rates

job order cost system in its two
Sunshine Manufacturing Company uses a
projected the
producing departments, Assembly and Finishing. The company
following production data for the current year:
Assembly Finishing
28,000
80,000
Direct labor hours 75,000
25,000
Machine hours P600,000
P960,000
Manufacturing OH
 220
Job Order
Costing
Chapter 6 -
the yearandthreemore were
in processatthe beginningof started
Twe np tih a t months period ended june 30.
Sunshine Company appilies overhead in theAssemblydepartmentbased direct on

and based on machine hours in the

Finishingdepartment. Belowis
inter hous, or ost incurred for each job and their status at the end ofjune. Ditent
labor cost is P5.50 per hour.

Job Job Delta Job Echo

Job Job Beta
Charlie
Alpha
Bal. 1/1 P35,000 P50,000

Assembly Department:
14,000 9,000 6,000 4,000
DL hrs 8,000
Mach hrs 2,500 3,000 2,800 3,200
1,500
Materials P25,000 P30,000 P40,000 P50,000 P25,000
Finishing Department:
DL Hrs 1,800 2,000 3,500 3,200 2,800
Mach hrs 6,500 11,000 10,000 7,500 3,000
Materials P12,000 P25,000 P30,000 P2,000 P5,000
Job Status Sold Sold Sold Completed incomplete
& on hand
Required: Determine the following:
1)Predetermined OH rate
2) Amount of overhead applied to each
job
3) Total manufacturing costs per job
4) Gross profit per job assuming a markup on cost of 40%
Ex 6-3. Costing of various jobs

Kring-Kring Company begins operations on July 1. Information from Job orders

of different customers shows the following;
Customer
July
Obama August September
P52,000 P44,000
Nixon
41,000
Bush 39,000 30,000
GMA 12,000

47,000 45,000
39,000 36,000
The job
ordered by
completed in AugustBush was completed
and Jobs ordered byin July. Job ordered by Obama was
September. Eachjob was soldat Nixon and GMA were completed in
its completion. cost plus 40% markup the month following
in
 - Job Order Costing
Chapter 221

Required: Determine the following:

1) Balance Work process at the endof
of in
each
2) Determine
the gross
profit for each month month

Ex. 6-4. Cost accounting cycle in job order

At the beginning of the year, Manila Manufacturing Company had the following
its inventory accounts:
balances in

Raw materials
P100,000
Work in process
232,000
Finished goods 720,000

The work in process subsidiary ledger shows the following balances:

Job No. Materials Labor Overhead
500 P22,000 P48,000 P72,000
600 15,000 30,000 45,000
Total P37,000 P78,000 P117,000

The finished goods inventory contains Job 400 with total cost of

P520,000 and Job 300 with a total cost of P400,000.

Summary of transactions for the 3-months ended Sept. 20, are given below:

a. Raw materials purchased on cash, P650,000.

b. Materials issued to production, P500,000, distributed as follows:

Job. 500 (25%), Job 600 (30%), Job 700 (25%), Job 800(15%) and the balance
represent factory supplies consumed.

C. Labor costs for the period:

Direct labor - P250,000 distributed as follows: Job 500 (25%); Job 600 (30%);
Job 700(20%) and the balance to Job 800
Indirect labor • P75,000

Selling and administrative expenses - P125,000.

d Administrative expenses and Manufacturing overhead incurred other than
follows:
indirect materials and indirect labor