XAVIER UNIVERSITY - ATENEO DE CAGAYAN

Cost Accounting
and Control
De la Pena | Ducto | Espedido | Gabeligno | Lilla | Olaer | Omar
Group 4
PRESENTS
Chapter 1 Job Order cost; journal entries: profit analysis

Problem 1- 12 Bangor Products Co. obtained the following information from

its records for April:

10Ax 11Bx 12Cx

Direct Materials cost $50,000 $30,000 $58,000
Direct Labor cost 140,000 120,000 110,000
Factory Overhead 100,000 80,000 126,000
Units Manufactured 10,000 5,000 14,000
Sales $300,000 $250,000 $350,000
Requirement:
Prepare, in summary form, the journal entries that
would have been made during the month to record
issuing materials to production, the distribution of
labor, and overhead costs; the completion of the jobs;
and the sale of the jobs.

Prepare schedules computing the following for April:

a) The gross profit or loss for each job completed

and for the business as a whole.

b) For each job, the gross profit or loss per unit.

(Round to the nearest cent.)
 Solution 1
Work in Process (Jobs 10Ax, 11Bx, 12Cx) $138,000
Materials $138,000
Work in Process (Jobs 10Ax, 11Bx, 12Cx) 370,000
Payroll 370,000
Work in Process (Jobs 10Ax, 11Bx, 12Cx) 306,000
Factory Overhead 306,000
Finished Goods 814,000
Work in Process (Jobs 10Ax, 11Bx, 12Cx) 814,000
Cash 900,000
Sales 900,000
Cost of Goods Sold 814,000
Finished Goods 814,000
Solution 2
10Ax 11Bx 12Cx Total
Sales $700,000 $150,0000 $350,000 $900,000
Manufacturing
Materials $50,000 $30,000 $58,000 $138,000
Direct Labor 140,000 120,000 110,000 370,000
Factory Overhead 100,000 80,000 126,000 306,000
Total Cost of Job $290,000 $230,000 `$294,000 $814,000
Gross Profit $10,000 $20,000 $56,000 $86,000

Number of Units Completed 10,000 5,000 14,000

Selling Price per Unit $30 $50 $25
Manufacturing Cost Per Unit 29 46 21
Gross Profit Per Unit $1 $4 $4
Chapter 2 Spoiled goods; loss charged to factory
overhead; loss charged to job
One of the tennis rackets that Ace Sporting Goods
Problem 2- 15 manufactures is a titanium model (Slam) that sells for $149.
The cost of each Slam consists of:

Materials ...................................................... $35

Labor ...................................................... 15
Factory Overhead ................................... 25
Total ...................................................... $75

Job 100 prodiced 100 slams, of which six were spoiled and
classified as seconds. Second are sold to discounts stores for
$50 each.
 Requirements
Under the assumption that
the loss from spoilage will be
distributed to all jobs
produced during the current
period, use general journal
entries to (a) record the
costs of production, (b) put
spoiled goods into inventory,
and (c) record the cash sale
of spoiled units.
Under the assumption that
the loss from spoilage will be
charged to Job 100, use
general journal entries to (a)
record the costs of
production, (b) put spoiled
goods into inventory, and (c)
record the cash sale of
spoiled units.
Solutions (req. 1)
a)
Work in Process $7,500
Materials $3,500
Payroll 1,500
Factory Overhead 2,500
b)
300
Spoiled Goods (6 x $50) 150
Factory Overhead (Loss due to Spoiled Goods) 450
Work in Process (6 x $75)
c)
Cash 300
Spoiled Goods 300
Solutions (req. 2)
a)
Work in Process $7,500
Materials $3,500
Payroll 1,500
Factory Overhead 2,500
b)
300
Spoiled Goods 300
Work in Process
c)
Cash 300
Spoiled Goods 300
Chapter 3 Payroll Calculation and Distribution: Overtime
and Idle Time
A rush order was accepted by Bartley’s Conversions for
five van conversion. The labor time records for the week
ended January 27 show the following (Hours not worked on
Problem 3-5 vans are idle time and are not charged to the job.

All employees are paid $20 per hour, except Klembara, who
receives $25 per hour. All overtime premium pay, except
Klembara’s, is chargeable to the job, and all employees, including
Klembara, receive time-and-a-half overtime hours.
 Requirement:
1. Calculate the total payroll and total net earnings for the
week. Assume that an 18% deduction for federal
income tax is required in addition to FICA deductions.
Assume that none of the employees has achieved the
maximums for FICA and unemployment taxes.
2. Prepare the journal entries to record and pay the
payroll.
3. Prepare the journal entry to distribute the payroll to the
appropriate accounts.
4. Determine the dollar amount of labor that is
chargeable to each van, assuming that the overtime
costs are proportionate to the regular hours used on
the vans. (First compute an average labor rate for
each worker, including overtime premium, and then
use that rate to charge all workers’ hours to vans.)
Round the labor rates to the nearest whole cent.
Solution (req. 1)
 Explanation (req. 1)
In order to get the amount of the total payroll and total net ·Overtime Premium per Hour
earnings for the week, we need to solve first through Since that all employees receive time-and-a-half
certain columns: overtime hours, it results in a total hourly rate for
·Hours (Given) overtime that is 150% of the regular rate. Compute this
·Hours Used by dividing the Rate per Hour by 2.
In each employee, add all of the hours that are distributed ·Overtime Premium
to the vans. The additional rate will be added to those employees
·Idle Time who worked overtime. Compute this column by
Idle time is the unused time of the employees’ given multiplying Overtime Hours to the Overtime Premium
working hours. This column’s equation is Hours less per Hour.
Hours Used. ·Amount of Idle Time
·Overtime Hours The amount of idle time is computed by multiplying the
The regular working time per week is 40 hours (8 hours Idle Time to Rate per Hour.
per day in 5 days). This column comprises subtracting the ·Payroll for the Employees
Hours from the regular working time, which is 40hrs. The payroll for the employees is their gross income. We
·Rate per Hour (Stated in the problem) compute this part by adding Factory Overhead and
·Factory Overhead Overtime Premium.
The cost of the overtime premium is charged in the ·TAX RATES
column of Factory Overhead since that the job Tax Rates are deducted from the Payroll to get the Net
worked on during the overtime period became the Earnings. The tax rates for 2021 are:
result of the random scheduling of jobs. Compute this >SSS - 13%
column by multiplying Hours Used by Rate per Hour. >PHILHEALTH - 3.5%
>PAG-IBIG - 2%
Conclusion:
Total payroll for the week is $6,715
Total net earnings for the week is $5,472.73
req. 2: Prepare the journal entries to record and pay the payroll.
req. 3: Prepare the journal entry to distribute the payroll to the
appropriate accounts.
req. 4: Determine the dollar amount of labor that is chargeable to each van,
assuming that the overtime costs are proportionate to the regular hours used
on the vans.

The Total Amount column is computed by getting the sum of Factory Overhead and Overtime Premium.
The Labor Rate, which is computed by dividing the Total Amount by the Hours, is multiplied to the amount
of labor that is chargeable to each van.
Chapter 4 Job cost sheets, Journal Entries
Luna Manufacturing Inc. completed Job 2525 on May 31, and
there were no jobs in process in the plant. Prior to June 1, the
predetermined overhead application rate for June was
computed from the following data, based on an estimate of
Problem 4-17 5,000 direct labor hours:

Estimate variable factory overhead.................... $20,000

Estimated fixed factory overhead.......................... 10,000
Total estimated factory overhead....................... $30,000
Estimated variable factory overhead per hour.. $ 4
Estimated fixed factory overhead per hour.......... 2
Predetermined overhead rate per direct labor hour.. 6

The factory has one production department and uses the

direct labor hour methods to apply factory overhead.
Three jobs are started during the month, and posting are
made daily to the job cost sheets from the material requisitions
and labor-time records. The following schedule shows the jobs
and amount posted to the job cost sheets:
Chapter 4 Job cost sheets, Journal Entries

Date Direct Direct Direct Labor

Job Started Materials Labor Hours
2526 June 1 $ 5,000 $ 10,000 1,600
Problem 4-17 2527
2528
June 12
June 15
10,000
4,000
15,000
7,000
1,900
1,300
$ 19,000 $ 32,000 4,800

The factory overhead control account was debited during

the month for actual factory overhead expenses of $27,000.
On June 11, Job 2526 was completed and delivered to the
customer using a mark on percentage of 50% on
manufacturing cost. On June 24, Job 2527 was completed
and transferred to finished Goods. On June 30, 2528 was
still in process.
Requirement:
1. Prepare job cost sheets for 2526, 2527, and 2528,
including factory overhead, applied when the job was
completed or at the end of the month for partially
completed jobs.
2. Prepare journal entries as of June 30 for the following:
a. Applying factory overhead to production.
b. Closing the applied factory overhead account.
c. Closing the factory overhead account.
d. Transferring the cost of the completed jobs to finished
goods.
e. Recording the cost of the sales and the sale of the JOB
2526.
 req. 1: Prepare job cost sheets for 2526, 2527, and 2528, including factory
overhead, applied when the job was completed or at the end of the month for
partially completed jobs.
req. 2: Prepare journal entries as of June 30 for the following:

JOB 2526
JOB 2527
JOB 2528