MGAB03H3 Lecture 5: Lecture 5 - Chapter 5
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Case 3-49
Avid Assemblers uses normal job-order costing to assign costs toproducts. The company assembles and packages 25 different productsaccording to customer specifications. Products are worked on inbatches of 20 to 40 units. Each batch is given a job number. OnOctober 1, the company had the following balances:
| Raw materials | $9,800 | |
| Work in process | 65,847 | |
| Finished goods | 30,640 |
Work in process consisted of the following jobs:
| Job 22 | Job 24 | Job 25 | |||||
| Direct materials | $6,200 | $5,190 | $4,800 | ||||
| Direct labour | 10,500 | 9,210 | 9,500 | ||||
| Applied overhead | 7,350 | 6,447 | 6,650 | ||||
| Total | $24,050 | $20,847 | $20,950 | ||||
| Number of units | 20 | 40 | 30 |
Finished goods consisted of Job 23, with the following costs:
| Job 23 | ||
| Direct materials | $8,200 | |
| Direct labour | 13,200 | |
| Applied overhead | 9,240 | |
| Total | $30,640 | |
| Number of units | 50 |
Shown below are the direct cost data related to jobs started inOctober:
| Job 26 | Job 27 | Job 28 | Total | ||||||
| Direct materials | $5,180 | $5,600 | $4,200 | $14,980 | |||||
| Direct labour | 11,200 | 9,340 | 5,910 | 26,450 | |||||
| Number of units | 20 | 30 | 20 |
Other information:
| 1. | Direct materials and direct labour added tobeginning work in process in October were as follows:
| |||||||||||||||||||||||||||||||||||
| 2. | Overhead is applied at a predetermined rate basedon the direct labour cost. | |||||||||||||||||||||||||||||||||||
| 3. | Actual expenses for October were as follows:
* 80% of employer contributions and benefits relate to factorypersonnel. | |||||||||||||||||||||||||||||||||||
| 4. | Purchases of direct materials (raw materials)during October amounted to $28,500. Indirect materials (supplies)are handled in a separate account. | |||||||||||||||||||||||||||||||||||
| 5. | Only Job Nos. 27 and 28 are still in process atclosing on October 31. Finished goods consisted only of Job No. 25at month end. | |||||||||||||||||||||||||||||||||||
6. | Avid writes off any under- and over-applied overhead to Cost ofGoods Sold in the month in which it is incurred. Requirements: | |||||||||||||||||||||||||||||||||||
a.Calculate Predetermined overhead rate
b.Calculate Unit cost of job 24 in October
c.Calulate the Oct 31 Balances for the following account:
Raw Materials, Work in Process, Finished Goods
d.What is the cost of goods manufactured?
e. Determine the under- or over- paid in October
Prepare the journal entry to dispose of this amount.
Yu Technology Co. manufactures CDs and DVDs for computer software and entertainment companies. Yu uses job order costing and has a perpetual inventory system. The business has a highly labour intensive production process, so it applies manufacturing overhead to jobs based on direct labour cost. Yu expects to incur $1,080,000 0f manufacturing overhead costs and estimated direct labour costs of $900,000 during 2015. At the end of March 2015,
Yu Technology reported work in process inventory of $15,000
During April 2015, Yu Technology recorded the following transactions.
1) Materials requisitioned for use in production:
Direct materials: $120,000
Indirect materials: $20,000
2) Advertising costs were incurred, $15,000.
3) Salaries and wages incurred as follows:
Direct labour $121,875
Indirect labour $40,625
Selling and administrative salaries $ 25,000
4) Insurance expired during the year, $30,000 (90% relates to the factory, the remainder is on selling and administrative items).
5) Depreciation recorded for the year, $80,000 (75% relates to factory assets and the remainder relates to selling and administrative assets).
6) Utilities expense incurred, $53,750 (80% of this amount relates to the factory, the remainder relates to the administrative offices).
7) Applied manufacturing overhead costs to jobs
8) Two jobs were completed with total costs of $120,000 & $85,000 respectively. They were sold on account at a mark-up of 75% on cost.
All purchases and services were acquired on account.
| (d) Record a journal entry to close manufacturing overhead to cost of goods sold. | ||||||||
| (e) Prepare an income statement for the year | ||||||||
| (f) Determine the balance in work in process inventory on April 30. | ||||||||
