Weygandt, Kimmel & Kieso/ Managerial Accounting Tools for business decision making
TUTORIAL 2
CHAPTER 2 JOB ORDER COSTING
1 (a) Distinguish between the two types of cost accounting systems. (b) What type of
industry is likely to use job order costing and what type of industry is likely to use process
costing? (c) Can a company use both types of cost accounting systems?
2 Identify the major steps in the flow of costs in a job order cost system.
3 There are three inventory control accounts in a job order system. Identify the control
accounts and their subsidiary ledgers.
4 Indicate the source documents that are used in charging costs to specific jobs.
5 During January, its first month of operations, Knox Company accumulated the following
manufacturing costs: raw materials $4,000 on account, factory labor $6,000 of which $5,200
relates to factory wages payable and $800 relates to payroll taxes payable, and utilities
payable $2,000. Prepare separate journal entries for each type of manufacturing cost.
6 In January, Knox Company requisitions raw materials for production as follows: Job 1 $900,
Job 2 $1,400, Job 3 $700, and general factory use $600. Prepare a summary journal entry to
record raw materials used.
7 Factory labor data for Knox Company is given in question 5. During January, time tickets
show that the factory labor of $6,000 was used as follows: Job 1 $2,200, Job 2 $1,600, Job 3
$1,400, and general factory use $800. Prepare a summary journal entry to record factory
labor used.
8 Marquis Company estimates that annual manufacturing overhead costs will be $900,000.
Estimated annual operating activity bases are direct labor cost $500,000, direct labor hours
50,000, and machine hours 100,000. Compute the predetermined overhead rate for each
activity base.
9 In March, Stinson Company completes Jobs 10 and 11. Job 10 cost $20,000 and Job 11
$30,000. On March 31, Job 10 is sold to the customer for $35,000 in cash. Journalize the
entries for the completion of the two jobs and the sale of Job 10.
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Weygandt, Kimmel & Kieso/ Managerial Accounting Tools for business decision making
10 Duggan Company applies manufacturing overhead to jobs on the basis of machine hours
used. Overhead costs are expected to total $325,000 for the year, and machine usage is
estimated at 125,000 hours. For the year, $342,000 of overhead costs are incurred and
130,000 hours are used.
Instructions
(a) Compute the manufacturing overhead rate for the year.
(b) What is the amount of under- or overapplied overhead at December 31?
(c) Prepare the adjusting entry to assign the under- or overapplied overhead for the year to
cost of goods sold.
11 A job order cost sheet for Lowry Company is shown below:
Job No. 92
Date
Beg. Bal. Jan. 1
8
12
25
27
Direct
materials
5,000
6,000
For 2,000 units
Direct Manufacturing
labor
overhead
6,000
5,100
8,000
6,400
4,000
18,000
3,200
14,700
2,000
13,000
Cost of completed job:
Direct materials
Direct labor
Manufacturing overhead
Total cost
Unit cost (45,700 ÷ 2,000)
13,000
18,000
14,700
45,700
22.85
Instructions
(a) On the basis of the foregoing data, answer the following questions.
(1) What was the balance in Work in Process Inventory on January 1 if this was the
only unfinished job?
(2) If manufacturing overhead is applied on the basis of direct labor cost, what
overhead rate was used in each year?
(b) Prepare summary entries at January 31 to record the current year’s transactions
pertaining to Job No. 92.
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12 Torre Corporation incurred the following transactions.
1. Purchased raw materials on account $46,300.
2. Raw materials of $36,000 were requisitioned to the factory. An analysis of the materials
requisition slips indicated that $6,800 was classified as indirect materials.
3. Factory labor costs incurred were $55,900, of which $51,000 pertained to factory wages
payable and $4,900 pertained to employer payroll taxes payable.
4. Time tickets indicated that $50,000 was direct labor and $5,900 was indirect labor.
5. Manufacturing overhead costs incurred on account were $80,500.
6. Depreciation on the company’s office building was $8,100.
7. Manufacturing overhead was applied at the rate of 150% of direct labor cost.
8. Goods costing $88,000 were completed and transferred to finished goods.
9. Finished goods costing $75,000 to manufacture were sold on account for $103,000.
Instructions: Journalize the transactions. (Omit explanations.)
13 At May 31, N, the accounts of Mantle Company show the following.
1. May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials
$8,200.
2. May 31 inventories—finished goods $9,500, work in process $17,900, and raw materials
$7,100.
3. Debit postings to work in process were direct materials $62,400, direct labor $50,000, and
manufacturing overhead applied $40,000.
4. Sales revenue totalled $210,000.
Instructions
(a) Prepare a condensed cost of goods manufactured schedule.
(b) Prepare an income statement for May through gross profit.
(c) Indicate the balance sheet presentation of the manufacturing inventories at May 31, N.
14* MD INC. Uses a job order costing for its brand new line of sewing machines. The cost
incurred for production during N totalled $9,000 of materials, $4,500 of direct labor costs,
and $3,000 of manufacturing overhead applied. The company ships all goods as soon as they
are completed which results in no finished goods inventory on hand at the end of any year.
Beginning work in process totalled $7,500, and the ending balance is $4,500. During the
year, the company completed 10 machines. How much is the cost per machine?
15* NR Company manufactures customized desks. The following pertains to job N°105:
Direct materials used
$37,600
Direct labor hours worked
1 200
Direct labor rate per hour
$32.00
Machine hours used
800
Applied factory overhead rate per machine hour $60.00
What is the total manufacturing cost for job N°105?
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Weygandt, Kimmel & Kieso/ Managerial Accounting Tools for business decision making
16*For JBS Company, the predetermined overhead rate is 60% of direct labor cost. During
the month, $150,000 of factory labor costs are incurred of which $35,000 is indirect labor.
Actual overhead incurred was $80,000. Calculate the amount of overhead debited to work in
process inventory?
17* The following amounts were reported by BK Company before adjusting its overapplied
manufacturing overhead of $4,000.
Raw material inventory
Finished goods inventory
Work in process inventory
Cost of goods sold
$20,000
30,000
50,000
385,000
Compute what amount BK will report as cost of goods sold after it disposes of its overapplied
overhead.
18 Shown below are the job cost related accounts for the law firm of Jack, Bob, and Will and
their manufacturing equivalents:
Law Firm Accounts
Supplies
Salaries and Wages Payable
Operating Overhead
Service Contracts in Process
Cost of Completed Service Contracts
Manufacturing Firm Accounts
Raw Materials
Factory Wages Payable
Manufacturing Overhead
Work in Process
Cost of Goods Sold
Cost data for the month of March follow.
1. Purchased supplies on account $1,500.
2. Issued supplies $1,200 (60% direct and 40% indirect).
3. Assigned labor costs based on time cards for the month which indicated labor costs of
$60,000 (80% direct and 20% indirect).
4. Operating overhead costs incurred for cash totalled $40,000.
5. Operating overhead is applied at a rate of 90% of direct attorney cost.
6. Work completed totalled $75,000.
Instructions: Journalize the transactions for March. (Omit explanations.)
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