Job order and Batch costing

In job order costing, the cost of each order produced for a given customer or the cost of each lot to be placed in stock is recorded on a job order cost sheet, sometimes called simply cost sheet. Problems: Calculation of job cost: Hellman Corporation uses job order costing and has two production departments, A and . udgeted manufacturing costs for !"### are as follows: Department A Department - B $irect %aterials & '""""" &(""""" $irect labor !""""" )""""" *actory overhead +""""" ,""""" -he actual materials and labor cost charged to .ob ,/! during !"### were as follows: $irect materials &!0,""" $irect labor: $epartment A &)""" $epartment &(!""" ########## &!",""" Hellman applied factory overhead to production orders on the basis of direct labor cost, using departmental rates predetermined at the beginning of the year on the basis of the annual budget. Required: $etermine the total manufacturing cost associated with job ,/! for !"########. SOLUTIONS: Total manu a!turin" !ost asso!iated #it$ %ob No& '() or )*------$irect materials $irect labor: $epartment A &)""" $epartment (!""" ########## *actory overhead: $epartment A 1&)"""2/""34 &!,""" $epartment 1&(!"""20"34 +""" ########### -otal manufacturing cost

&!0"""

&!""""

&/"""" ############# &'0""" ++++++++ Calculation of predetermined factory overhead rates based on annual budget: $epartment A: &+"""""5&!"""""6/""3 $epartment : &,"""""5&)"""""60"3

Problems: -opper Incorporation had the following inventories on %arch (: *inished goods (0""" 7ork in process (8"'" %aterials (,""" -he work in process account control three jobs: %ob ,).ob ,)) .ob ,)( %aterials !)"" /,"" ()"" 9abor !("" !'"" (/0" Applied factory overhead (+)" !(+" (")" ######### ######### ######### +0)" )!+" ,!/" 66666 66666 66666 -he following information pertains to %arch operations: a4 %aterial purchased and received !!""": terms n5/" b4 %aterial re:uisitioned for production, !(""". ;f this amount, !,"" was for indirect materials< the difference was distributed: 0/"". to job +!(, ',"" to job +!!, 08"" to job +!/. c4 %aterials return to the store room from the factory +"" of which !"" was for indirect materials, the balance from job +!! d4 %aterials return to vendors )"" e4 =ayroll, after deducting '3 for *ICA ta2 and (!3 for employee>s income ta2, was /"')". -he payroll amount due the employees was paid during march f4 ;f the payroll, direct labor represented 003: indirect labor !"3 sales salaries (03 and admin salaries ("3. -he direct labor cost was distributed: +,!" to job +!(, )(+" to job +!! and +/!" to job +!/. g4 An additional (/.!3 was entered for employer payroll ta2es, representing the employer '3 *ICA ta2, 0.,3 state unemployment insurance ta2, and .)3 federal unemployment insurance ta2. ?mployer payroll ta2es related to direct labor are charged to the factory overhead control account h4 *actory overhead, other than any previously mentioned, amounted to 00"". Included in this figure were !""" for depreciation of factory building and e:uipment and !0" for e2pired insurance on the factory. -he remaining overhead, /!0", was unpaid at the end of %arch. i4 *actory overhead applied to production: )"3 of the direct labor cost to be charged to the three jobs based on the labor cost of %arch. j4 .obs +!( and +!! were completed and transferred to the finished goods warehouse k4 oth jobs +!( and +!! were sipped and billed at a gross profit of ,"3 of the cost of goods sold. l4 Cash collection from accounts receivable during %arch were +8,0". Required: (4 =repare job order cost sheets to post beginning inventory data

!4 .ournali@e the %arch transactions with current postings to general ledger inventory accounts and to job order cost sheet.

Solutions:
-/ and )/ Toper In! %ob order !ost s$eet to Post be"innin" in0entor1 data 2ar!$ -3 )*4* %ob ,)%aterials 9abor *actory overhead -otal b4 %at f4 9abor i4 ;verhead -otal ######### !/,/+ 66666 .4Completed and transferred to warehouse !88,) !(0"+ 666666 66666 j4 Completed and transferred j4 Ander 7ork in progress warehouse !)"" !("" (+)" ####### +0)" 0/"" b4%at +,!" c4%at 0(/+ f49abor i4 overhead ######### %ob ,)) /,"" !'"" !(+" ######## )!+" ',"" b4 %at 1,""4 f4 9abor )(+" i4 ;verhead +0!) ######## %ob ,)( ()"" (/0" (")" ####### ,!/" 08"" +/!" 0"0+

)/ Dr&
a/ %aterials Accounts =ayable b/ 7ork in process .ob +!( .ob +!! .ob +!/ *actory overhead control a5c %aterials !/ %aterials 7ork in process .ob #+!! *actory overhead control A5C d/ Accounts payable %aterials 0/"" ',"" 08"" !!""" !!"""

5r&

()+"" !,"" !(""" +"" 1,""4 ,"" !"" )"" )""

e/ =ayroll Accrued payroll ?mployee>s income ta2 payable *ICA ta2 payable Accrued =ayroll A5c Cash =ayroll deductions: (!3B'36(83 (""3#(836)(3

/)""" /"')" ,0+" !++" /"')" /"')"

/"')"5)(36/)""" / 7ork in process A5c .ob +!( .ob +!! .ob +!/ *actory overhead control A5c %arketing e2penses Control A5c Admin e2penses Control A5c =ayroll A5c "/ *actory overhead control A5c %arketing e2penses control Admin e2penses control *ICA ta2 payable *ederal unemployment ta2 payable Ctate unemployment ta2 payable $/ *actory overhead control Accounts payable Accumulated depreciation#*actory uilding and e:uipment =repaid insurance i/ 7ork in process .ob +!( 1+,!"2)"34 .ob +!! 1)(+"2)"34 .ob +!/ 1+/!"2)"34 *actory overhead control 1or over Applied factory overhead4 ./ *inished goods 7ork in process .ob +!( 0(/+ +0!) 0"0+

!"8"" +,!" )(+" +/!" '+"" 0'"" /)"" /)""" /'+! '0/ 0"( !++" /", !"0! 00"" /!0" !""" !0" (+'!"

(+'!" 0//), 0//), 1!/,/+4

.ob +!!

1!88,)4

6/ Accounts receivable Cales l/ Cash Accounts Deceivable 10//),2,"34B0/'),6','/) 5omputations or )7"/ *ICA -a2 *ederal unemployment ta2 Ctate unemployment ta2 Total 8a!tor1 (880 !!) (0/8 ------(9,) +++++

','/) ','/) +8,0" +8,0"

2ar6etin" /88 ,+ /") ------9:( ++++

Admin !++ /" !"0 ------:*+++++

Total !++" /", !"0! -------:*-, ++++