JOB ORDER COSTING

Problem 1

1. The amount of direct materials purchased during the year was?

Direct Materials Used 72,000.00

Add: Direct Materials Inventory, Ending 7,000.00
Less: Direct Materials Inventory, Beginning (9,000.00)
Direct Materials Purchased 70,000.00

2. The total costs added to work-in-process during the year was?

Direct Materials Used 72,000.00

Direct Labor Cost 80,000.00
Applied Factory Overhead 24,000.00
Total Manufacturing Cost 176,000.00

3. If CARUSO Company applies overhead to jobs on the basis of direct labor hours and Job 3 took 120 hours,
how much overhead should be applied to that job?

Applied Overhead 24,000.00

Allocation Basis - Direct Labor Hours 10,000
Predetermined Rate (P 24,000 / 10,000 hours) 2.40
Overhead Applied to Job 3 (P 2.40 x 120 hours) 288.00

Problem 2

Beginning
Job 101 Job 102
Materials 24,000.00 8,000.00
Labor 26,000.00 4,000.00
FOH 13,000.00 2,000.00
 Total 63,000.00 14,000.00

Current Costs
Job 101 Job 102
Mateirals 10,000.00 40,000.00
Labor 8,000.00 16,000.00
FOH 4,000.00 8,000.00
Total 22,000.00 64,000.00

Cumulative Costs 85,000.00 78,000.00

Number of units 5,000 4,000
Cost Per Unit 17.00 19.50

PROCESS COSTING

Forming Department - Weighted Average

BWIP 500 headdresses (100% complete as to materials; 40% complete as to conversion cost)
Started 6,500 headdresses
TUTBAF 7,000 headdresses

F&T 4,900 headdresses

EWIP 2,100 headdresses (100% complete as to materials; 50% complete as to conversion cost)
TUAF 7,000 headdresses

Equivalent Units of Production

Units Mat. % EUP CC % EUP

F&T 4,900 100 4,900 100 4,900
EWIP 2,100 100 2,100 50 1,050
EUP 7,000 5,950

Cost Allocation
 Materials CC TOTAL
Beginning 1,000.00 1,500.00 2,500.00
Current 3,200.00 5,045.00 8,245.00
TOTAL 4,200.00 6,545.00 10,745.00
EUP 7,000 5,950
Cost/EUP 0.60 1.10

Materials CC TOTAL
F&T 2,940.00 5,390.00 8,330.00
EWIP 1,260.00 1,155.00 2,415.00
TOTAL 4,200.00 6,545.00 10,745.00

Decorating Department - FIFO Method

BWIP 600 headdresses (80% complete as to materials; 90% complete as to conversion cost)
Started 4,900 headdresses
TUTBAF 5,500 headdresses

EWIP 300 headdresses (50% complete as to materials; 75% complete as to conversion cost)
F&T 5,200 headdresses
TUAF 5,500 headdresses

Equivalent Units of Production

Units Mat. % EUP CC % EUP

F&T 5,200 100 5,200 100 5,200
EWIP 300 50 150 75 225
EUP, WA 5,350 5,425
BWIP 600 80 480 90 540
EUP, FIFO 4,870 4,885

Allocation of Costs
 Transf. In Materials Conversion Cost
Cost 8,330.00 41,395.00 58,620.00
EUP 4,900 4,870 4,885
Cost/EUP 1.70 8.50 12.00

F&T 5,200
Started and Completed 4,600
From BWIP 600

Transf. In Materials CC TOTAL

F&T
S&C 7,820.00 39,100.00 55,200.00 102,120.00
From BWIP - 1,020.00 720.00 1,740.00
1,170.00 4,320.00 6,210.00 11,700.00 13,440.00
Total Cost Allocated to Finished and Transferred 115,560.00

Transf. In Materials CC
EWIP 510.00 1,275.00 2,700.00 4,485.00

STANDARD COSTING

Problem 1

1. What is the labor rate variance?

Actual Labor Cost (17,300 hours x P 10.20) 176,460.00

Actual Labor at Standard (17,300 hours x P 10.25) 177,325.00
Labor Rate Variance - Favorable 865.00

2. What is the labor efficiency variance?

Actual Labor at Standard Cost (17,300 hours x P 10.25) 177,325.00

Standard Labor at Standard Cost (17,500 hours x P 10.25) 179,375.00
 Labor Efficiency Variance - Favorable 2,050.00

3. What is the material price variance (based on quantity purchased)?

Actual Materials Purchased (12,300 pounds x P 4.25) 52,275.00

Actual Materials at Standard Price (12,300 pounds x P 4.50) 55,350.00
Materials Price Variance - Favorable 3,075.00

4. What is the material quantity variance?

Actual Materials at Standard Price (11,750 pounds x P 4.50) 52,875.00

Standard Materials at Standard Price (12,250 pounds x P 4.50) 55,125.00
Material Quantity Variance - Favorable 2,250.00

5. Assume that the company computes material price variance on the basis of material issued to production.
What is the total material variance?

Actual Materials at Actual Price (11,750 x P 4.25) 49,937.50

Actual Materials at Standard Price (11,750 x P 4.50) 52,875.00
Material Price Variance - Favorable 2,937.50

Actual Materials at Standard Price (11,750 x P 4.50) 52,875.00

Standard Materials at Standard Price (12,250 x P 4.50) 55,125.00
Material Quantity Variance - Favorable 2,250.00

Total Material Variance (MPV + MQV) 5,187.50

Actual Materials at Actual Price 49,937.50

Standard Materials at Standard Price 55,125.00
Total Material Variance 5,187.50

Problem 2
1. One-Variance Approach, Total Overhead Variance

Actual Factory Overhead (P 26,250 + P 38,000) 64,250.00

Standard Factory Overhead (11,250* hours x P 4.85**) 54,562.50
Total Overhead Variance - Unfavorable 9,687.50

* 4,500 units x 2.50 hours

** P 1.75 + P 3.10

2. Two-Variance Approach, Controllable Variance

Actual Factory Overhead 64,250.00

Budgeted FOH on Standard Hours (P 38,750 + P 19,687.50*) 58,437.50
Controllable Variance - Unfavorable 5,812.50

* 11,250 hours x P 1.75

3. Two-Variance Approach, Non-Controllable Variance

Budgeted FOH on Standard Hours 58,437.50

SH x SR (11,250 hours x P 4.85) 54,562.50
Non-Controllable Variance - Unfavorable 3,875.00

4. Three-Variance Approach, Spending Variance

Actual Factory Overhead 64,250.00

Budgeted FOH on Actual Hours (P 38,750 + P 17,500*) 56,250.00
Spending Variance - Unfavorable 8,000.00

*10,000 hours x P 1.75

5. Three-Variance Approach, Efficiency Variance

 AH x SR (10,000 x P 4.85) 48,500.00
SH x SR (11,250 x P 4.85) 54,562.50
Efficiency Variance - Favorable 6,062.50

6. Three-Variance Approach, Volume Variance

Budgeted FOH on Actual Hours 56,250.00

AH x SR 48,500.00
Volume Variance - Unfavorable 7,750.00

7. Four-Variance Approach, Variable Overhead Spending Variance

Actual Variable Overhead 26,250.00

Variable Overhead on Actual Hours (10,000 hours x P 1.75) 17,500.00
Variable Overhead Spending Variance - Unfavorable 8,750.00

8. Four-Variance Approach, Variable Overhead Efficiency Variance

AH x SVOR (10,000 hours x P 1.75) 17,500.00

SH x SVOR (11,250 hours x P 1.75) 19,687.50
Variable Overhead Efficiency Variance - Favorable 2,187.50

9. Four-Variance Approach, Fixed Overhead Spending Variance

Actual Fixed Overhead 38,000.00

Budgeted Fixed Overhead 38,750.00
Fixed Overhead Spending Variance - Favorable 750.00

10. Four-Variance Approach, Volume Variance

Budgeted FOH on Actual Hours 56,250.00

 AH x SR 48,500.00
Volume Variance - Unfavorable 7,750.00

BONUS. Four-Variance Approach, Fixed Overhead Efficiency Variance

AH x SFOR (10,000 hours x P 3.10) 31,000.00

SH x SFOR (11,250 hours x P 3.10) 34,875.00
Fixed Overhead Efficiency Variance - Favorable 3,875.00