ACC_241 Chapter 3 Job Order Costing..pdf

Activity # 4: Activity #1: Job Costing Example: (LO #2, #3, #4, #5)

Taylor Associates uses a job-order costing system and applies overhead on the basis of direct labor hours. At the

beginning of the year, management estimated that 26,000 direct labor hours would be worked and $1,300,000 of

manufacturing overhead costs would be incurred.

During the year, the company actually worked 24,000 direct labor hours and incurred the following manufacturing costs:

Direct materials used in production $1,240,000

Direct labor 1,800,000

Indirect labor 280,000

Indirect materials 220,000

Insurance 150,000

Utilities 190,000

Repairs & maintenance 180,000

Depreciation 320,000

Required:

1. Calculate the predetermined overhead application rate (plant-wide rate) for the year.

2. Determine the amount of manufacturing overhead applied to work in process during the year.

3. What was the total product costs incurred?

4. Determine the amount of under-applied or over-applied overhead for the year.

Chapter 3 Job Order Costing

Activity #5: Determine the Cost of a Job (LO#4)

Derrick Products Company uses a job costing system. The company estimated its annual overhead to be $100,000, and the

number of direct labor hours for the year to be 20,000 hours. In the first month, the following jobs were completed:

Job #115 Job #205

Direct materials used $11,000 $14,500

Direct labor cost $23,000 $12,500

Direct labor hours 1,500 hours 1,250 hours

Refer to the Derrick Products Company. What is the total manufacturing cost of Job #115?

Activity #6: COGM/COGS and Over-Under-Applied Overhead (LO#2, #3, #4, #5)

Smelly Fishery is a canning company in Fragrant City. The company uses a normal costing system in which factory

overhead is applied on the basis of direct labor costs. Budgeted factory overhead for 2018 was $680,400, and management

budgeted $324,000 of direct labor costs. During the year, the company incurred the following actual costs.

Direct materials used $384,000

Direct labor $306,000

Manufacturing Overhead $658,000 (Don’t know this until after end of period)

Inventory Balances: January 1 st

December 31 st

Materials $ 70,000 $63,000

Work-in-process $ 41,000 $36,900

Finished goods $ 26,000 $23,400

A) Calculate the predetermined overhead rate.

B) The amount of direct materials purchased during the year is calculated to be:

C) The cost of goods manufactured during the year is calculated to be:

D) The cost of goods (before adjustment for over/under applied OH) sold during the year is calculated to be:

E) The adjusted cost of goods sold during the year is calculated to be (assuming OH Variance closed to COGS)