JOB ORDER

COSTING
ILLUSTRATIVE PROBLEMS
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Direct Material, USED
xxx
Direct Labor
xxx
Overhead
xxx
Total Manufacturing
xxx
Cost Work in Process, Beginning xxx
Less:Work in Process, End
xxx
2
Cost of Goods Manufactured
ILLUSTRATION 1
The following cost data were taken from the records of JGG manufacturing company:
Depreciation on factory equipment 1,000
Depreciation on sales office 500
Advertising 7,000
Freight-out (shipping) 3,000
Wages of production workers 28,000
Raw Materials used 47,000
Sales Salaries and commissions 10,000
Factory rent 2,000
Factory Insurance 500
Materials Handling 1,500
Administrative Salaries 2,000
3
 Based upon this information, the manufacturing cost incurred

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during the year was:

a. 18,500
b. 80,000
c. 80,500
d. 83,000

Direct Materials
47,500
Direct Labor
28,000
Factory Overhead:
Depreciation – Factory Equipment 1,000
Factory Rent 2,000
Factory Insurance 500 4
Materials Handling 1,500
ILLUSTRATION 2
The following information was taken from Kate Company’s accounting records for the year ended
December 31, 2018:
Increase in materials inventory 15,000
Decrease in Finished Goods inventory 35,000
Raw Materials purchased 430,000
Direct-Labor Payroll 200,000
Factory Overhead 300,000
Freight-out 45,000

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 There was no work-in-process inventory at the beginning or

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end of the year. Kate’s cost of goods sold is:

a. 950,000
b. 965,000
c. 975,000
d. 995,000

Decrease in finished goods Inventory

35,000
Add: Raw Materials purchased 430,000
Direct-Labor Payroll 200,000
Factory Overhead 300,000
930,000
Total
965,000 6
Less: Increase in Raw Materials Inventory
ILLUSTRATION 3
A manufacturing company had inventories at the beginning and end of the 2018 as follows:
Beginning Ending
Materials 44,000 60,000
Work in Process 80,000 96,000
Finished Goods 50,000 36,000 REQUIRED:
1) Cost Of Goods Sold
During 2018, the following costs and expenses were incurred:
During the period.

Raw materials purchased 600,000

Direct labor cost 240,000
Indirect labor cost 120,000
Taxes, utilities and depreciation of factory building 100,000
Sales and office salaries 128,000
7
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000
Direct materials use
+ Direct labor
. Overhead .
584 000
240 000
220

Total manufacturing cost 1 044 000

+ WIP beginning
80 000
- WIP ending . (96 000)
Cost of goods
manufactured 1 028 000
+ Finished goods beginning
50 000 . (44 000+600 000-60 000) -
Finished goods ending (36 000)
. (120 000+100 000) 8
. Cost of goods sold
ILLUSTRATION 4
The following are the accounts of Josie Manufacturing Co. appeared in its balance sheet on December 31,
2017 and December 31, 2018:
2017 2018
REQUIRED:
Materials Inventory 60,000 90,000
Compute for 2018:
Work in Process Inventory 34,000 35,000 a. The amount of raw materials
Finished Goods Inventory 46,000 36,000Purchased.
b. The cost of goods manufactured.
Accrued Factory Payroll 6,200 7,000
c. The payment of payroll

The following amounts appeared in the company's statement of comprehensive income for 2018:
Materials used 600,000
Cost of goods sold 1,840,000
Direct Labor 410,000
Indirect Labor 140,000
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Raw materials inventory, 19x7 P 60,000
Purchases (squeeze) 630,000 (1)
Materials available for use 690,000
Raw materials inventory, 19x8 90,000
Raw materials used 600,000
Direct labor 410,000
Factory overhead (squeeze) 821,000
Manufacturing cost 1,831,000
Work in process inventory, 19x7 34,000
Total 1,865,000
Work in process inventory, 19x8 (35,000)
Cost of goods manufactured (Squeeze) 1,830,000 (2)
Finished goods inventory , 19x7 46,000
Goods available for sale 1,876,000
Finished goods inventory , 19x8 (36,000)
Cost of goods sold (given) 1,840,000

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 Accrued factory payroll, 19x7 6,200
Direct labor 410,000
Indirect labor 140,000

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Accrued factory payroll, 19x8 ( 70,000 )
Payment of payroll 549,200 (3)
Materials used 600,000
Add: Materials, end 90,000
Materials available for use 690,000
Less: Materials, beg 60,000
Purchases 630,000 (1)

COGS 1,840,000
Add: Finished Goods, end 36,000
Goods available for sale 1,876,000
Less: Finished Goods, beg 46,000
Cost of goods, manufactured 1,830,000 (2)

Accrued Factory Payroll, beg 6,200

Add: Direct Labor 410,000
Indirect Labor 140,000
Less: Accrued Factory Payroll, end 7,000
Payment of payroll 549,200 (3)
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ILLUSTRATION 5
Selected data concerning last year's operation of Terry Companybare as follows:
Inventories
Beginning Ending
Finished Goods 90,000 110,000
Work in Process 80,000 30,000 REQUIRED:
a. Cost of Materials
Materials 75,000 85,000 Purchased
b. Direct Labor Cost
charged to production
Other data: c. Cost of goods
manufactured
a. Materials used, P326,000
b. Total manufacturing costs charged to jobs during the year
c. Cost of goods available for sale, P826,000
d. Marketing and administrative expenses, P25,000
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“ Materials, inventory, beginning
Purchases (Squeeze)
Available for use
Materials inventory, ending
Raw materials used
75,000
336,000 (1)
411,000
(85,000)
326,000
Direct labor [(P686,000-P326,000) ÷ 160 %] 225,000 (2)
Factory overhead (P225,000 x 60%) 135,000
Manufacturing cost 686,000
Work in process inventory, beginning 80,000
Total 766,000
Work in process inventory, ending (30,000)
Cost of goods manufactured 736,000 (3)

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“ Materials used
Add: Materials, end
Materials available for use
Less: Materials, beg
Purchases
326,000
85,000
411,000
75,000
336,000 (1)

Total Manufacturing Cost 686,000

Less: Materials used 326,000
Balance 360,000
Direct Labor (360,000 ÷ 160%) 225,000 (2)

Goods available for sale 826,000

Less: Finished Goods, beg 90,000
Cost of goods, manufactured 736,000 (3)

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ILLUSTRATION 6
The Transporter Company is a small machine shop that uses highly skilled labor and job order cost system. The total debits and credits in
certain accounts just before year-end are:
December 31, 2018
Total Debits Total Credits
Direct materials control 100,000 70,000
Work in process control 320,000 305,000
Factory department overhead control 85,000 -
Finished goods control 325,000 300,000
Cost of goods sold 300,000 -
Factory department overhead applied - 90,000
Note that “total debits” in the inventory accounts would include beginning inventory balances, if any.
The above accounts do not include the following:
a.The labor cost recapitulation for the December 31 working day: direct labor, P5,000; indirect labor, P1,000.
b.Miscellaneous factory overhead incurred in December 30, P1,000. 15
ILLUSTRATION 6
Additional Information:
• Factory Overhead has been applied as a percentage of direct labor cost through December 31.
• Direct Material purchases during 2018 were 5,000.
• There was no returns to suppliers.
• Direct labor costs during 2018 totaled 150,000, not including the December 31 working day described above.

REQUIREMENTS:
a. Ending Inventory of Direct
Materials
b. Work In Process Control
c. Finished Goods

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“ 1. Direct materials inventory, end (P100,000 – P70,000) P30,000

2. Work in process control, end (P320,000 – P305,000) P15,000

3. Finished goods control, end, (P325,000 – P300,000) P25,000

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ILLUSTRATION 7
The cost department of the Marlyn Corporation prepared the following data and costs for the year 2018:
Inventories: January 1 December 31
Finished goods 48,600 -
Work in Process 81,500 42,350
Materials 34,200 49,300
Depreciation – factory Equipment 21,350
Interest Earned 6,300
Finished goods inventory : January 1; 300 units: December 31: $20 Units, all sold from current year’s production
Sold During 2018, 3,880 units at 220 per unit
Materials Purchased 364,000
Direct Labor 162,500
Indirect Labor 83,400
Freight in 8,600
Miscellaneous Factory Overhead 47,900
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Purchases Discount 5,200
ILLUSTRATION 7

REQUIRED:
1. Unit Cost Of the finished goods
Inventory, December 31, 2018
2. Total Gross Profit

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 Materials inventory, Jan. 1

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34,200
Purchases (P364,000 + P8,600 – P5,200)
367,400
Available for use
401,600
Materials inventory, Dec. 31
(49,300)
Direct materials used
352,300
Direct labor
162,500
Factory overhead (P21,350 + P83,400 + P47,900) 152,650
Manufacturing cost
667,450
Work in process inventory, Jan 1
(81,500)
Total 20
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(1) P74,193/420 units = 176.65

(2) Sales (3,880 units x P220) P853,600

Cost of gods sold 281,007
Gross profit P172,593

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ILLUSTRATION 8
The Violy Company reports the following data for October.
Product X
Product Y
Production (units) 10,000 units 8,000 units
Per unit production costs applicable to beginning
inventories and September production:
Direct materials 4 3
Direct labor 10 20
Applied factory overhead 7 14
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37
Sales price per unit 30 50
Beginning inventories (units) 1,000 units 900 units 22
ILLUSTRATION 8
Other Data:
a) Actual factory overhead was P 180,000;
b) Factory overhead is applied at a rate of P .70 per direct labor peso;
c) Over or underapplied factory overhead is closed to the cost of goods sold account; and
d) Marketing and administrative expenses are P 100,900

REQUIRED:
1. Over-underapplied factory
overhead; and
2. Operating income for
October

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 “
1. Applied factory overhead 182,000
Actual factory overhead 180,000
Over-Applied Factory Overhead 2,000

Product X Product Y
Applied Factory Overhead 7 Aplied Factory OH 14
Production 10,000 Production 8,000 units
units Total Applied OH 112,000
Total Applied FOH 70,000

Over-Applied OH 2,000

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“
FACTORY OVERHEAD

70,000
180,000
112,000

182,000

2,000

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“
2. Operating Income

Sales 710,000
Less: Cost of goods sold 512,000
OPEX 180,000 613,000
NET INCOME/LOSS 96,500

SALES
Product X (9,000*30) 270,000
Product Y (8,800*50) 440,000
TOTAL 710,000

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 “
2. Operating Income

Manufacturing cost (P210,000 + P296,000) 506,000

Direct Material Beginning inventories (P21,000 + P33,300) 54,300
Product X 10,000 units x 4 Total
40,000 560,300
Product Y 8,000 units x 3 Ending inventories (P42,000 + P3,700) 45,700
Direct Labor
24,000 Cost of goods sold at normal 514,600
Product X 10,000 units x 10 100,000
Product Y 8,000 units c 20 160,000 Over-applied factory overhead ( 2,000 )
Cost of goods sold at actual 512,600
OH
Product X 10,000 units x 7 70,000
Product Y 8,000 units x 14 112,000

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ILLUSTRATION 9
Last month Marjorie Company put P 60,000 of materials into production. The Grinding Department used
8,000 labor hours at P 5.60 per hour, and the Machining Department used 4,600 hour at a cost of P 6 per
hour. Factory overhead is applied at a rate of P 6 per labor hour in the Grinding Department and P 8 per
labor hour in the Machining Department. Inventory accounts had the following beginning and ending
balances:
Beginning Ending
Finished Goods 22,000 17,000
Work in Process 15,000 17,600
Materials 20,000 18,000

REQUIRED:
a) Conversion Cost, and
b) Cost of goods sold
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 Direct Labor (8,000 hrs x 5.60) + (4,600 hrs x 6) 72, 400

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Factory OH (8,000 hrs x 6) + (4,600 hrs x 8)       84,800
Conversion Cost 157,200

Materials Inventory, Beginning 20,000

Purchases 60,000
Available for sale 80,000
Materials Inventory, End (18,000)
Direct Materials Used 62,000
Conversion Cost 157,200
Factory Cost 219,200
Work In Process, Beginning 15,000
Total
234,200
Work In Process, End (17,600)
Cost of goods Manufactured 216,600
Finished Goods, Beginning 22,000
Goods Available for sale 238,600
Finished Goods Inventory, End (17,000)
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Cost of Goods Sold 221,600
THANK YOU.