Question 3 Teratoor Space provides interior design services in Bandar Teemor. It uses a job order costing system to accept orders from the customers. The manufacturing overhead cost is absorbed based on direct labour hour. The budgeted manufacturing overhead cost for the month of January is RM96,500. Management expects a total of 19,300 direct labour hours will be used. Prepare journal entries for the month of January: Jan Particular 13 19 22 Purchase 200 boxes of direct material from Bharatt on credit for RM4,200. 55 boxes of direct material was requested from the store for production. It was bought for RM11.50 per box. The decoration section has purchased 240 boxes indirect material which cost RM26.10 per box from Otara by cash. Direct labour cost paid for the month of January amounted to RM5,900. 26 The depreciation cost of delivery van for the month of January is RM770. 30 For the month of January, a total of 6,300 direct labour hours have been utilised.

Question 3 Teratoor Space provides interior design services in Bandar Teemor. It uses a job order costing system to accept orders from the customers. The manufacturing overhead cost is absorbed based on direct labour hour. The budgeted manufacturing overhead cost for the month of January is RM96,500. Management expects a total of 19,300 direct labour hours will be used. Prepare journal entries for the month of January: Jan Particular 13 19 22 Purchase 200 boxes of direct material from Bharatt on credit for RM4,200. 55 boxes of direct material was requested from the store for production. It was bought for RM11.50 per box. The decoration section has purchased 240 boxes indirect material which cost RM26.10 per box from Otara by cash. Direct labour cost paid for the month of January amounted to RM5,900. 26 The depreciation cost of delivery van for the month of January is RM770. 30 For the month of January, a total of 6,300 direct labour hours have been utilised.

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter2: Job Order Costing

Section: Chapter Questions

Problem 4BE: Applying factory overhead Bergan Company estimates that total factory overhead costs will be 620,000...

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(Appendix 3A) Method of Least Squares Using Computer Spreadsheet Program The controller for Beckham Company believes that the number of direct labor hours is associated with overhead cost. He collected the following data on the number of direct labor hours and associated factory overhead cost for the months of January through August. Required: 1. Using a computer spreadsheet program such as Excel, run a regression on these data. Print out your results. 2. Using your results from Requirement 1, write the cost formula for overhead cost. (Note: Round the fixed cost to the nearest dollar and the variable rate to the nearest cent.) 3. CONCEPTUAL CONNECTION What is R2 based on your results? Do you think that the number of direct labor hours is a good predictor of factory overhead cost? 4. Assuming that expected September direct labor hours are 700, what is expected factory overhead cost using the cost formula in Requirement 2?
PREDETERMINED FACTORY OVERHEAD RATE Marston Enterprises calculates a predetermined factory overhead rate so that factory overhead may be applied to production during the month. It calculates the overhead using three different methods and then decides which one to use. Total estimated factory overhead costs are 600,000. Total estimated direct labor hours are 30,000. Total estimated direct labor costs are 1,200,000. Total machine hours are estimated to be 200,000. Calculate the predetermined overhead application rates based on (1) direct labor hours, (2) direct labor costs, and (3) machine hours.
JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORY OVERHEAD M. Evans Sons manufactures parts for radios. For each job order, it maintains ledger sheets on which it records direct labor, direct materials, and factory overhead applied. The factory overhead control account contains postings of actual overhead costs. At the end of the month, the under- or over applied factory overhead is charged to the cost of goods sold account. Factory overhead is applied on the basis of direct labor hours. For Job Nos. 101, 102,103, and 104, direct labor hours are 12, 000, 10,000, 11, 000, and 18,000, respectively. The overhead application rate is 1.20/direct labor hour. (a) Purchased raw materials on account, 50,000. (b) Issued direct materials: (c) Issued indirect materials to production, 8,000. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 15,000. (f) Paid electricity bill, taxes, and repair fees for the factory and charged to production, 8,000. (g) Depreciation expense on factory equipment, 30,000. (h) Applied factory overhead to Job Nos. 101104 using the predetermined factory overhead rate (see above). (i) Finished Job Nos. 101103 and transferred to the finished goods inventory account as products N, O, and P. (j) Sold products N and for 50,000 and 45,400, respectively. (k) Transferred under- or over applied factory overhead balance to the cost of goods sold account. REQUIRED 1. Prepare general journal entries to record transactions (a) through (k). 2. Post the entries to the work in process and finished goods accounts only and determine the ending balances in these accounts. 3. Compute the balance in the job cost ledger and verify that this balance agrees with that in the work in process control account.
Overhead Assignment: Actual and Normal Activity Compared Reynolds Printing Company specializes in wedding announcements. Reynolds uses an actual job-order costing system. An actual overhead rate is calculated at the end of each month using actual direct labor hours and overhead for the month. Once the actual cost of a job is determined, the customer is billed at actual cost plus 50%. During April, Mrs. Lucky, a good friend of owner Jane Reynolds, ordered three sets of wedding announcements to be delivered May 10, June 10, and July 10, respectively. Reynolds scheduled production for each order on May 7, June 7, and July 7, respectively. The orders were assigned job numbers 115, 116, and 117, respectively. Reynolds assured Mrs. Lucky that she would attend each of her daughters weddings. Out of sympathy and friendship, she also offered a lower price. Instead of cost plus 50%, she gave her a special price of cost plus 25%. Additionally, she agreed to wait until the final wedding to bill for the three jobs. On August 15, Reynolds asked her accountant to bring her the completed job-order cost sheets for Jobs 115, 116, and 117. She also gave instructions to lower the price as had been agreed upon. The cost sheets revealed the following information: Reynolds could not understand why the overhead costs assigned to Jobs 116 and 117 were so much higher than those for Job 115. She asked for an overhead cost summary sheet for the months of May, June, and July, which showed that actual overhead costs were 20,000 each month. She also discovered that direct labor hours worked on all jobs were 500 hours in May and 250 hours each in June and July. Required: 1. How do you think Mrs. Lucky will feel when she receives the bill for the three sets of wedding announcements? 2. Explain how the overhead costs were assigned to each job. 3. Assume that Reynoldss average activity is 500 hours per month and that the company usually experiences overhead costs of 240,000 each year. Can you recommend a better way to assign overhead costs to jobs? Recompute the cost of each job and its price, given your method of overhead cost assignment. Which method do you think is best? Why?
Question 1 Georgia Woods Limited, manufactures furnitures to customers' specifications and uses job order costing. A predetermined overhead rate is used in applying manufacturing overhead to individual jobs. In Department One, overhead is applied on the basis of machine -hours, and in Department Two, on the basis of the direct labor hours. At the beginning of the current year, management made the following budget estimates to assist in detemining the overhead application rate: Department One Department Two Direct labor cost $300,000 $225,000 Direct labor hours 20, 000 15,000 Manufacturing overhead $420,000 $337, 500 Machine-hours 12,000 7,500 Production of a batch of custom furniture ordered by Tai Hing Cafe (job no.48) was started early in the year and completed three weeks on January 29. The records for this job show the following cost information: Job order for City Furniture (job no. 48) Department One Department Two Direct materials cost $10, 100 $7,600 Direct labor cost $16,500…
Problem 18: Predetermined Factory Overhead believes that the company would be better if it will use two factory overhead single factory overhead rate that is based on machine hours. Its manager Davao Corp. uses job order costing system to produce its products. It uses a rates, one based on material costs and the other one is based machine hours. The following data are for year 2020: Materials related Factory overhead Machine related Factory overhead Total Budgeted Factory overhead Costs of materials used on jobs Total Machine hours Data related to three jobs worked on in December follow: Material Costs Direct Labor Costs Machine Hours used Job # 1 168,000 128,000 68,000 Budgeted FOH 3,840,000 10,400,000 14,240,000 Job # 2 656,000 104,000 36,000 Job Order Costing 12,800,000 1,600,000 Job # 3 312,000 144,000 23,200 Actual factory overhead related to materials was P318,400 and actual factory overhead related to machine hours was P846,400. Required: 1. Determine the predetermine factory…
Problem 22: Cost of Goods Sold Statement Julius Inc. is employing normal costing for its job orders. The overhead is applied using a predetermined overhead rate. The following information relates to the Julius Inc. for the year ended December 31, 2020: Job No. 101 Job No. 102 Job No. 103 Job in Process, January 1, 2020: Direct Materials 40,000 30,000 0 Labor 60,000 40,000 0 Factory Overhead 30,000 20,000 0 Costs added during 2020 Materials 20,000 10,000 100,000 Labor 100,000…
Problem 4.1: West Manufacturing Inc. (WMI) operates a job-order cost system and applies overhead on the basis of direct labor hours. When preparing the budget for the upcoming fiscal year, the following budget items determined: (1) overhead = $150,000, (2) direct labor hours (DLH) = 8,000 and (3) direct labor dollars (DL$) = $60,000. Beginning Ending Inventory Raw materials (RM) Work in process (WIP) Finished goods (FG) $21,000 $86,000 $108,000 Inventory $16,000 $71,500 $58,000 Actual results: $650,000 $133,000 $160,000 10,000 $108,000 $165,500 Actual sales Purchases Direct labor $s Direct labor hours S&A Actual MOH Required: Compute WMI's predetermined overhead rate, applied overhead, and over/under applied overhead. Compute net income using before and after the over/under applied overhead adjustment. Using the Cost Flow Worksheet, compute the inventory turnovers for each inventory Compute cost of Job 160, where the job required direct labor of $1,200 direct labor hours (average pay…
Problem 3 Predertimed Factory Overhead Harold Corp uses the job order costing system. Factory overhead is applied to jobs on the basis of direct labor cost. The following estimates are made at the beginning of the year: Fabricating Machining Assembly Total Direct Labor 600,000 300,000 900,000 1,800,000 Fcatory overhead 1,050,000 1,200,000 270,000 2,520,000 The following are the cost required by each department. Fabricating Machining Assembly Total Direct Materials 9,000 600 4,200 13,800 Direct Labor 8,400 1,500 18,600 28,500 Factory overhead ? ? ? ? At the end of the year, the…
Job Order Costing – Problem 2 Job order costing system is used by Amber Inc. Machine hours is used as the based for plantwide overhead rate. However, the manager has heard that overhead rate by department can improve cost assignment than plantwide rate. Below is the information for the two departments: Department A Department B Overhead costs (expected) $75,000 $33,000 Normal activity (machine hours) 10,000 8,000 Required: 1. Compute a predetermined overhead rate for the plant as a whole based on machine hours. 2. Compute predetermined overhead rates for each department using machine hours. (Note: Carry your calculations out to three decimal places.) 3. Job 73 used 20 machine hours from Department A and 50 machine hours from Department B. Job 74 used 50 machine hours from Department A and 20 machine hours from Department B. Compute the overhead cost assigned to each job using the plantwide rate computed in Requirement 1. Repeat the computation using the departmental rates found in…
Problem #1 Gold Nest Company uses job order costing system in which overhead is applied to jobs on the basis of direct labor cost. Estimated total direct labor cost for the year would be $200,000 and total manufacturing overhead cost would be $330,000. Inventory balance at the beginning of the year were Raw materials at $25,000, work in process at $10,000 and finished goods at $40,000. During the year, the following transactions were completed: Raw materials purchased for cash, $275,000 Raw materials requisitioned for use in production, $280,000. Materials charged directly to jobs, $220,000, the remaining materials were indirect. Cost of employee services were direct labor, $180,000; indirect labor, $72,000; sales commissions, $63,000, and administrative salaries, $90,000. Rent for the year was $18,000 of which $13,000 is related to factory operations and the rest to selling and administrative activities. Factory utility costs incurred, $57,000. Advertising costs, $140,000.…
Problem #1 Gold Nest Company uses job order costing system in which overhead is applied to jobs on the basis of direct labor cost. Estimated total direct labor cost for the year would be $200,000 and total manufacturing overhead cost would be $330,000. Inventory balance at the beginning of the year were Raw materials at $25,000, work in process at $10,000 and finished goods at $40,000. During the year, the following transactions were completed: Raw materials purchased for cash, $275,000 Raw materials requisitioned for use in production, $280,000. Materials charged directly to jobs, $220,000, the remaining materials were indirect. Cost of employee services were direct labor, $180,000; indirect labor, $72,000; sales commissions, $63,000, and administrative salaries, $90,000. Rent for the year was $18,000 of which $13,000 is related to factory operations and the rest to selling and administrative activities. Factory utility costs incurred, $57,000. Advertising costs, $140,000.…