Chapter 5

JOB ORDER COSTING

Question: 2

Frog machine works collects its cost data by the job order cost accumulations procedure.
For job 642 the following data are available:

Direct Materials: DIRECT LABOUR

9/14 issued……………..$1,200 Week of sept 20--- 180hrs@ $6.20/hrs.

9/20 issued…………….. 662 week of sept 26 ---140 hrs. @7.30/hrs.

9/22 issued…………….. 480

Factory overhead is applied at the rate of 3.5 per direct labor hour

Required:

(1) The appropriate information entered on a job order cost sheet.

(2) The sale price of the job, assuming that it was contracted with a markup of 40%of cost

Answer:

Requirement: 1 FORGE MACHINE WORKS

Job order cost sheet –job 642

Direct Materials:
9/14 issued 1200
9/20 issued 662
9/22 issued 480 2342

DIRECT LABOUR :
sept 20 180*6.20 1116
sept 26 140*7.30 1022 2138
Factory overhead Cost:
sept 20 180*3.50 630
sept 26 140*3.50 490 1120
Total manufacturing 5600
Requirement: 2

Here markup means profit so the sale price will be 5600+40%of 5600

Calculation:

Cost = 6500

(+) Markup 5600*40/100 = 2240

Sale price = 7840

Problem no: 5-1

Tedyuscung Company produce special machines made customer specification. The following data
pertain to job 1106:

Customer: Markem machine shop Date of started: 11/4/19---

Customer’s order no: C696 Date of finished: 11/18/19----

Date: October 27 Total cost to manufacture?

Description: 18 drilling machine Sale price: $20,425

WEEK ENDING 11/11(1 st week) WEEK ENDING 11/18(2 nd week)

Material used, Dep1…………………………. $2,400 $1300

Direct Labor rate, Dep1……………………. $8.20 per hour $8.20 per hour

Labor hours used Dep1……………………..300 200

Direct labor rate, Dep2……………………..$8.00per hour $8.00per hour

Labor hours used, Dep2……………………..150 70

Machines hours, Dep2………………………..200 120

Applied factory overhead, Dep1…………. $4.00 per labor hour $4.00 per labor hour

Applied factory overhead, Dep2…………$1.80 per Machine hour $1.80 per Machine hour

Marketing and Administrative cost are charged to each order at a rate of 25% of the cost to
manufacturing.

Required:

A suitable cost sheet showing the above data. Did the company make an adequate profit margin on
this order?

SALOUTION:

JOB ORDER COST SHEET

Customer: Markem machine shop: JOB 1106

Customer’s order no: C696: Description: 18 drilling machine

Direct Material Cost (dep-1):

1st week cost 2400

2nd week cost 1300 3700
Direct Labor Cost (dep-1):
 1st week cost ( 300*8.20) 2460
2nd week cost (200*8.20) 1640 4100
Direct Labor Cost (dep-2):

1st week cost (150*8) 1200

2nd week cost (70*8) 560 1760
F O H COST (DEP-1):

1st week cost (300*4) 1200

2nd week cost (200*4) 800 2000
F O H COST (DEP-1):

1st week cost (200*1.80) 360

2nd week cost (120*1.80) 216 576
Total Manufacturing cost 12136

Requirement 2:

Tedyuscung Company

Income statement

For the year ended…….

Sale 20425
(-) Cost (12136)
Gross profit 8289
(-)Marketing &administrative Exp 25%of total cost
(12136*25/100) 3034
Profit Margin 5255