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    Job Order Costing Problems and Solutions

    Uploaded by

    Erika Guillermo
    1) The document outlines the calculation of cost of goods manufactured and sold using a job order costing system. It provides the accounting entries for raw materials, work in process, finished goods, manufacturing costs, and cost of goods sold. 2) Spoiled goods are handled differently depending on whether the spoilage is charged to the company or a specific customer. Reworked goods also have different costing treatments. 3) The key accounting figures are cost of goods manufactured, cost of goods available for sale, and cost of goods sold. Inventory accounts for work in process and finished goods are used to calculate these figures.

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    © All Rights Reserved
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    Job Order Costing Problems and Solutions

    Uploaded by

    Erika Guillermo
    138 views14 pages
    1) The document outlines the calculation of cost of goods manufactured and sold using a job order costing system. It provides the accounting entries for raw materials, work in process, finished goods, manufacturing costs, and cost of goods sold. 2) Spoiled goods are handled differently depending on whether the spoilage is charged to the company or a specific customer. Reworked goods also have different costing treatments. 3) The key accounting figures are cost of goods manufactured, cost of goods available for sale, and cost of goods sold. Inventory accounts for work in process and finished goods are used to calculate these figures.

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    1) The document outlines the calculation of cost of goods manufactured and sold using a job order costing system. It provides the accounting entries for raw materials, work in process, finished goods, manufacturing costs, and cost of goods sold. 2) Spoiled goods are handled differently depending on whether the spoilage is charged to the company or a specific customer. Reworked goods also have different costing treatments. 3) The key accounting figures are cost of goods manufactured, cost of goods available for sale, and cost of goods sold. Inventory accounts for work in process and finished goods are used to calculate these figures.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    138 views14 pages

    Job Order Costing Problems and Solutions

    Uploaded by

    Erika Guillermo
    1) The document outlines the calculation of cost of goods manufactured and sold using a job order costing system. It provides the accounting entries for raw materials, work in process, finished goods, manufacturing costs, and cost of goods sold. 2) Spoiled goods are handled differently depending on whether the spoilage is charged to the company or a specific customer. Reworked goods also have different costing treatments. 3) The key accounting figures are cost of goods manufactured, cost of goods available for sale, and cost of goods sold. Inventory accounts for work in process and finished goods are used to calculate these figures.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 14

    STATEMENT OF COST OF GOODS MANUFACTURED AND SOLD

    Raw Materials, Beg X


    Add: Raw Materials NET Purchases X
    Less: Raw materials, End (X)
    Raw Materials issued to production X
    Less: Indirect Materials used (X)
    Direct Materials Used X X
    Add: Direct Labor incurred X
    Manufacturing OH applied X
    TOTAL MANUFACTURING COST (TMC) X
    Add: Work In Process, Beg X
    TOTAL COST OF GOODS PUT INTO PROCESS X
    Less: Work In Process, End (X)
    COST OF GOODS MANUFACTURED (CGM) X
    Add: Finished Goods, Beg X
    COST OF GOODS AVAILABLE FOR SALE (COGAS / TGAS) X
    Less: Finished Goods, End (X)
    COST OF GOODS SOLD (COGS / CGS) X
    SPOILED GOODS
    CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
    Total Cost of Goods
    Less: Cost of Spoiled Goods
    Total Cost of Goods Transferred to Finished Goods
    Divided by Good Units
    Cost per unit

    CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS


    Total Cost of Goods
    Less: Sales Price / NRV of Spoiled Goods
    Total Cost of Goods Transferred to Finished Goods
    Divided by Good Units
    Cost per unit

    REWORKED GOODS
    CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
    Total Cost of Goods
    Divided by Good Units
    Cost per unit

    CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS


    Total Cost of Goods
    Add: Rework Cost
    Total Cost of Goods Transferred to Finished Goods
    Divided by Good Units
    Cost per unit
    X
    (X)
    X
    X
    X

    X
    (X)
    X
    X
    X

    X
    X
    X

    X
    X
    X
    X
    X
    PROBLEM 1:
    Mango Graham Corporation employs a job order costing system and accounts for various jobs for all of its products.
    Cost of production data (in pesos) for the month of October follows:

    Work In Process, October 1:


    Job 03 Job 04
    Direct Materials 2,400 1,500
    Direct Labor 3,600 2,880
    Applied Overhead 2,340 1,872

    Finished Goods October 1:


    Job 01 Job 02
    Direct Materials 18,000 6,720
    Direct Labor 24,000 8,400
    Applied Overhead 15,600 5,460

    Total manufacturing cost added during the month of October:


    Job 03 Job 04 Job 05
    Direct Materials 10,920 13,200 36,000
    Direct Labor 14,400 16,800 42,000
    Applied Overhead 9,360 10,920 27,300

    During the month of October, Job 03, Job 04, and Job 05 were completed and sold.
    The pre-determined overhead rate was 65% of direct labor cost. The actual overhead at the end of the year was P33,000.
    Based on management judgment, any identified OH variance is insignificant.

    1. What is the cost of goods manufactured for the month of October?


    A. P195,492 B. P180,900 C. P143,700

    2. Assuming that Job 06 was also completed, what is the cost of goods manufactured for Job 06?
    A. P6,252 B. P20,580 C. P40,920

    3. Assuming the information from number 1 above, what is the adjusted cost of goods sold for the month of
    A. P19,260 B. P161,640 C. P180,900

    SOLUTIONS

    Total manufacturing cost added during the month of October:


    Job 03 Job 04
    Direct Materials 10,920 13,200
    Direct Labor 14,400 16,800
    Applied Overhead 9,360 10,920
    TOTAL 34,680 40,920

    TOTAL MANUFACTURING COST (TMC) 197,580


    Add: Work In Process, Beg 14,592
    TOTAL COST OF GOODS PUT INTO PROCESS 212,172
    Less: Work In Process, End 16,680
    COST OF GOODS MANUFACTURED (CGM) 195,492
    Add: Finished Goods, Beg 78,180
    COST OF GOODS AVAILABLE FOR SALE (COGAS / TGAS) 273,672
    Less: Finished Goods, End 92,772
    COST OF GOODS SOLD (COGS / CGS) 180,900

    UNADJUSTED COST OF GOODS SOLD (COGS / CGS) 180,900.00

    Applied Manufacturing OH (from Job 03, 04, 05 and 06) 52,260


    Actual Manufacturing OH (given) 33,000
    OVERAPPLIED MOH 19,260

    ADJUSTED COST OF GOODS SOLD (COGS / CGS) 161,640.00


    NOTE: Immaterial Overapplied MOH is a deduction to arrive at the adjusted balance of COGS
    of its products.

    Job 06
    4,800
    7,200
    ?

    he year was P33,000.

    C. P143,700 D. P180,912

    ed for Job 06?


    C. P40,920 D. P16,680

    ods sold for the month of October?


    C. P180,900 D. P200,160

    Work In Process, October 1:


    Job 05 Job 06 Job 03
    36,000 4,800 Direct Materials 2,400
    42,000 7,200 Direct Labor 3,600
    27,300 4,680 (65% of DL Cost) Applied Overhead 2,340
    105,300 16,680 Number 2: D TOTAL 8,340

    Finished Goods October 1:


    Job 01
    (Job 03 & Job 04 were the WIP, Beg) Direct Materials 18,000
    Direct Labor 24,000
    (Job 06 was not completed during the period) Applied Overhead 15,600
    Number 1: A TOTAL 57,600
    (Job 01 & Job 02 were the Finished Goods, Beg)
    SQUEEZE
    (Job 03, Job 04 and Job 05 were the products sold during the period. Hence, their costs comprise of the COGS)

    Number 3: B
    ance of COGS
    Job 04
    1,500
    2,880
    1,872
    6,252

    Job 02
    6,720
    8,400
    5,460
    20,580
    the COGS)
    PROBLEM 2: Buko Pandan Company’s Job 501 for the manufacture of 2,200 units, which was completed during August at the

    Direct Materials
    Direct Labor
    Manufacturing OH (includes an allowance for spoilage of P1)
    Total Per-Unit Cost

    Final inspection of Job 501 disclosed 200 spoiled units which were sold to a local jobber for P6,000.
    1. Assume that the spoilage loss is charged to all production or due to internal failure, what would be the un
    A. P53

    2. Assume that the spoilage loss is mainly attributable to exacting specifications and charged to a specific
    A. P53

    SOLUTIONS
    CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
    Total Cost of Goods (2,200 x 56)
    Less: Cost of Spoiled Goods (200 x 56)
    Total Cost of Goods Transferred to Finished Goods
    Divided by Good Units (2,200 - 200)
    Cost per unit

    CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS


    Total Cost of Goods (2,200 x 55)
    Less: Sales Price / NRV of Spoiled Goods
    Total Cost of Goods Transferred to Finished Goods
    Divided by Good Units (2,200 - 200)
    Cost per unit
    NOTE: As the spoilage is due to customer specifications / specific job, do not include any allowance for spo
    s completed during August at the unit cost is presented below:

    P20
    18
    18
    P56

    al failure, what would be the unit cost of the product produced on Job 501?
    B. P55 C. P56 D. P58.60

    ons and charged to a specific job, what would be the unit cost of the product produced on Job 501?
    B. P57.50 C. P56.50 D. P58.60

    123,200
    11,200
    112,000
    2,000
    56

    121,000
    6,000
    115,000
    2,000
    57.5
    include any allowance for spoilage as management does not expect any spoilage.
    D. P58.60
    PROBLEM 3: During March, Yema Cake company incurred the following costs on Job 109 for the manufacture of 200 cake ba

    Direct Materials P660


    Direct Labor 800
    Manufacturing OH (150% of DL Cost) 1,200
    Total Cost P2,660

    Cost of reworking 10 batches:


    Direct Materials P100
    Direct Labor 160

    1. Assume that the rework costs were attributable to internal failure or charged to all jobs, what is the cost p
    A. P15.80 B. P14.60

    2. Assume that the rework costs were attributable to customer-imposed standards, what is the cost per finis
    A. P15.80 B. P14.60

    SOLUTIONS
    REWORKED GOODS
    CASE 1 – CHARGED TO COMPANY / ALL JOBS / INTERNAL FAILURE
    Total Cost of Goods 2,660
    Divided by Good Units 200
    Cost per unit 13.3

    CASE 2 – CHARGED TO CUSTOMER / SPECIFIC JOB / EXACTING SPECIFICATIONS


    Total Cost of Goods 2,660.00
    Add: Rework Cost 500.00 Direct Materials
    Total Cost of Goods Transferred to Finished Goods 3,160.00 Direct Labor
    Divided by Good Units 200.00 MOH
    Cost per unit 15.8 Total Rework Cost
    NOTE: Do not forget to still include the MOH cost.
    e manufacture of 200 cake batches:

    to all jobs, what is the cost per finished unit of Job 109?
    C. P14.00 D. P13.30

    rds, what is the cost per finished unit of Job 109?


    C. P14.00 D. P13.30

    100
    160
    240
    500

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