Cosacc job order costing sample problem PDF

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COSACC – Job Order Costing and Accounting for Losses Lecture HandoutsCost Accumulation Techniques: Job Order vs. Process Costing Job Order Process Type of Product Unique products and services Homogenous/similar products and services Approach Customized to the need of the clientMass-produced using a ...

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COSACC – Job Order Costing and Accounting for Losses Lecture Handouts Cost Accumulation Techniques: Job Order vs. Process Costing Job Order Type of Product Unique products and services Approach Cost Accumulation Major Cost Report

Process Homogenous/similar products and services Customized to the need of the Mass-produced using a series of client standardized processes Accumulated by job, project or Accumulated by process customer Job cost sheet for each unique Cost of production report for job, project or customer each major production processes

Accounting for Losses  Shrinkage o Evaporation o Leakage o Oxidation  Production errors o Defects can be economically reworked o Spoilage cannot be economically reworked Normal Loss—expected during production  Anticipated on all jobs o Include cost when calculating predetermined overhead application rate o Include cost less the estimated disposal value  Specific to a job o Applied to the specific job o Include cost less the estimated disposal value Abnormal Loss  Abnormal Loss—exceeds what is expected during production  Abnormal spoilage o Period cost—includes cost of abnormal loss less any disposal value Accounting for Scrap  Cost reduction o If common – overhead o If specific to job – WIP  Other income

Sample Problems Problem 1 (Job Order Costing) The following costs were incurred in February 2015 by Container Corp., which produces steel storage bins: Direct materials purchased on account, Direct materials used for jobs: Job #217 Job #218

$76,000 $44,800 7,200

Other jobs Direct labor costs for month: Job #217 Job #218 Other jobs Actual overhead costs for February

53,600 $10,400 14,000 19,600

105,600

44,000 220,000

The balance in Work in Process Inventory on February 1 was $16,800, which consisted of $11,200 for Job #217 and $5,600 for Job #218. The February beginning balance in Direct Material Inventory was $44,600. Actual overhead is applied to jobs at a rate of $4.95(predetermined rate) per dollar of direct labor cost. Job #217 was completed and transferred to Finished Goods Inventory during February and delivered to the customer at agreed-upon price of cost plus 35%. Required:  Prepare journal entries to record the preceding information.  Determine the February ending balance in WIP Inventory. How much of this balance relates to Job #218? Problem 2 (Accounting for Spoilage) Harper Co.’s Job 501 for the manufacture of 2,200 coats, which was completed during August at the unit costs presented below. Final inspection of Job 501 disclosed 200 spoiled (ibabawas or ichacharge sa OH)(abnormal-expense period cost) coats which were sold to a jobber for P6,000. Direct materials P20 Direct labor 18 Factory overhead (includes an allowance of P1 for spoiled work) 18 Required:  Assume that spoilage loss is charged to all production during August. What would be the unit cost of the good coats produced on Job 501?  Assume instead that the spoilage loss is attributable to the exacting specifications of Job 501 and is charged to this specific job. What would be the unit cost of the good coats produced on Job 501? Problem 3 (Accounting for Rework Costs) Dela Toya Co. incurred the following total costs on Job 69 for manufacture of 100 units for the current month: Direct materials P3,000 Direct labor P4,000 Overhead (50% of DL) P2,000 During the current month, 10 units were considered defective, and were reworked at the same time it was discovered. Costs associated with the rework are shown below: Direct materials P250 Direct labor P340 Various overhead costs 50% of DL Required:  If the rework costs are due to internal failure, then how much will be the unit cost charged to Job 69?  If the rework costs are due to the exacting specifications of the job, then how much will be the unit cost charged to Job 69?  If the rework costs are deemed to be abnormal, prepare journal entry for the rework. Problem 4 (Accounting for Scrap) Assume that there are 100 units that were identified as scrap during the current period valued P1,000 in total (which is immaterial on the part of the company), prepare journal entries assuming that:  Scrap is attributable to the specific job – J14344

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Scrap is attributable commonly to all jobs Scrap is treated as other income...