Chapter # 3

Job Order Costing

Sameer Hussain

www.a4accounting.weebly.com
Job Order Costing
Chapter # 3

SYLLABUS ACCORDING TO UNIVERSITY OF KARACHI:

 Job order costing under Perpetual Inventory System.

WHAT THE EXAMINER USUALLY ASK?

 Computation of:
o Opening inventory of raw material.
o Ending inventory of raw material.
o Opening inventory of goods in process.
o Ending inventory of goods in process.
o Opening inventory of finished goods.
o Ending inventory of finished goods.
o Factory overhead rate.
 General Journal entries.
 General Ledger of goods in process.
 General Ledger of raw material.
 General Ledger of finished goods.

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 Job Order Costing
Chapter # 3

JOB ORDER COSTING

A costing process to assess the individual costs of performing each job is called job order
costing. This is important in organization that produce a range of different products and also in
service organizations. Job is an identifiable discrete piece of work carried out by an
organization.

POSSIBLE GENERAL ENTRIES

 Purchase of Raw Materials on Account:
Raw materials DR. (with materials amount)
Accounts payable CR. (with payable amount)
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 Raw Materials Returned to Supplier:

Accounts payable DR. (with return amount)
Raw materials CR. (with return amount)
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 Raw Materials Issued to Factory for Production:

Work in process DR. (with material issued for production)
Raw materials CR. (with material amount issued)
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 Indirect Material Issued to Factory:

Factory overhead DR. (with indirect material amount)
Raw materials CR. (with indirect materials amount)
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 Direct Labour Used:

Work in process (Labour) DR. (with direct labour amount)
Accrued payroll CR. (with direct labour amount)
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 Indirect Labour Used:

Factory overhead DR. (with indirect labour amount)
Accrued payroll CR. (with indirect labour amount)
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 Direct and Indirect Labour Paid:

Accrued payroll DR. (with cash payment)
Cash CR. (with cash amount)
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 Actual Factory Overhead Incurred:

Factory overhead DR. (with actual factory overhead amount)
Accounts payable CR. (with actual factory overhead)
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 Factory Overhead Applied:

Work in process DR. (with applied factory overhead amount)
Factory overhead applied CR. (with applied factory overhead)
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Job Order Costing
Chapter # 3
 Goods Completed and Transferred to Finished Goods:
Finished goods DR. (with finished goods amount)
Work in process CR. (with finished goods amount)
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 Cost of Finished Goods Sold:

Cost of goods sold DR. (with cost of goods sold amount)
Finished goods CR. (with cost of goods sold amount)
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 Goods Sold on Account:

Accounts receivable DR. (with receivable amount)
Sales CR. (with sales amount)
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 Closing of Under Applied Factory Overhead:

Cost of goods sold DR. (with under applied factory overhead)
Under applied factory overhead CR. (with under applied FOH)
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OR

 Closing of Over Applied Factory Overhead:

Over applied factory overhead DR. (with over applied factory overhead)
Cost of goods sold CR. (with over applied FOH)
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ILLUSTRATION # 1:
Dell Company uses Job Order Cost System. The manufacturing operations for the year ended
December 31, 1983 were as follows:
(1) Purchased raw materials on account Rs.140,000.
(2) Materials issued to factory of Rs.120,000 of which Rs.20,000 was indirect materials.
(3) Direct labour cost incurred Rs.90,000 and Rs.10,000 indirect labours.
(4) Factory overhead application rate was 90% on direct labour cost.
(5) Factory overhead cost incurred on account Rs.80,000.
(6) Cost of jobs completed Rs.250,000.
(7) Cost of goods sold Rs.180,000
(8) Sales on account Rs.230,000.
REQUIRED
Record all the above transactions in the General Journal & give an entry to close the factory
overhead account.

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 Job Order Costing
Chapter # 3

SOLUTION # 1:
Dell Company
General Journal
Date Particulars P/R Debit Credit
1 Raw materials 140,000
Accounts payable 140,000
(To record the purchase of raw material on
account)
2 Work in process 100,000
Factory overhead 20,000
Raw material 120,000
(To record the raw material issued)
3 Work in process 90,000
Factory overhead 10,000
Accrued payroll 100,000
(To record the direct and indirect labour used)
4 Work in process (90,000 x 90%) 81,000
Factory overhead applied 81,000
(To record the applied factory overhead)
5 Factory overhead 80,000
Accounts payable 80,000
(To record the factory overhead costs incurred)
6 Finished goods 250,000
Work in process 250,000
(To record the goods completed and transferred to
finished goods)
7 Cost of goods sold 180,000
Finished goods 180,000
(To record the cost of goods sold)
8 Accounts receivable 230,000
Sales 230,000
(To record the goods sold on account)
9 Cost of goods sold 29,000
Under – applied factory overhead 29,000
(To adjust the under-applied factory overhead)

Factory Overhead
2 Raw material 20,000 4 Work in process 81,000
3 Accrued payroll 10,000 9 Cost of goods sold 29,000
5 Accounts payable 80,000

110,000 110,000

ILLUSTRATION # 2: (INVENTORIES BALANCES)

Moiz Manufacturing Company uses job order cost system. The ledger accounts show the
following inventories:
Inventories: 31 December (Rs.) 1 January (Rs.)
Raw materials 40,000 26,000
Work in process 62,000 50,000
Finished goods 60,000 25,000

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Job Order Costing
Chapter # 3
The manufacturing operations for the month of January 2003 are summarized as follows:
(a) Materials purchased on account Rs.100,000.
(b) Material returned to suppliers Rs.8,000.
(c) Materials issued to jobs for Rs.78,000.
(d) Labour used Rs.59,000 of which Rs.50,000 was used directly.
(e) Depreciation on machinery Rs.12,000.
(f) Factory overhead cost incurred Rs.42,000.
(g) The factory overhead rate is applied 120% of direct labour cost.
(h) The jobs were completed and shipped to customers at a billed price of Rs.190,000.
REQUIRED
Give the necessary journal entries and prepare T – accounts for raw materials, work in process,
and finished goods and complete in all respect.

SOLUTION # 2:
Moiz Company
General Journal
Date Particulars P/R Debit Credit
1 Raw materials 100,000
Accounts payable 100,000
(To record the purchase of raw material on account)
2 Accounts payable 8,000
Raw material returned 8,000
(To record the material returned to the suppliers)
3 Work in process 78,000
Raw material 78,000
(To record the raw material issued)
4 Work in process 50,000
Factory overhead 9,000
Accrued payroll 59,000
(To record the direct and indirect labour used)
5 Factory overhead 12,000
Allowance for depreciation 12,000
(To record the factory machine depreciation)
6 Factory overhead 42,000
Accounts payable 42,000
(To record the factory overhead costs incurred)
7 Work in process (50,000 x 120%) 60,000
Factory overhead applied 60,000
(To record the applied factory overhead)
8 Finished goods 176,000
Work in process 176,000
(To record the goods completed and transferred to
finished goods)
9 Cost of goods sold 141,000
Finished goods 141,000
(To record the cost of goods sold)
10 Accounts receivable 190,000
Sales 190,000
(To record the goods sold on account)
11 Cost of goods sold 3,000
Under – applied factory overhead 3,000
(To adjust the under-applied factory overhead)

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 Job Order Costing
Chapter # 3
Raw Material
Balance 26,000 2 Accounts payable 8,000
1 Accounts payable 100,000 3 Work in process 78,000
Balance c/d 40,000
126,000 126,000

Work in Process
Balance 50,000 8 Finished goods 176,000
3 Raw material 78,000 Balance c/d 62,000
4 Accrued payroll 50,000
7 Factory overhead 60,000
238,000 238,000

Finished Goods
Balance 25,000 9 Cost of goods sold 141,000
8 Work in process 176,000 Balance c/d 60,000
201,000 201,000

Factory Overhead
4 Accrued payroll 9,000 7 Work in process 60,000
5 All for depreciation 12,000 9 Cost of goods sold 3,000
6 Accounts payable 42,000
63,000 63,000

ILLUSTRATION # 3: (WORK – IN – PROCESS ACCOUNT)

The following information appears in the work in process inventory account:-
Work in Process Inventory
Balance January 1 60,000 Finished goods 280,000
Direct material 110,000 Balance March 31, 70,000
Direct labour 80,000
Factory overhead 100,000
350,000 350,000
Factory overhead is applied as a percentage of direct labour cost, direct labour charged to work
in process at March 31, is estimated to be Rs.20,000. Finished goods sold on credit Rs.340,000.
REQUIRED
a) Factory overhead percentage on direct labour cost.
b) Factory overhead applied and direct materials used on goods still in process at March
31.
c) General Journal entries to record:
i) Manufacturing costs charged to production during March.
ii) Transfer of production to finished goods warehouse during March.
iii) Cost of goods sold
iv) Credit sales.

SOLUTION # 3:
Computation of Factory Overhead Rate:
Factory overhead rate = Factory overhead X 100
Direct labour
Factory overhead rate = 100,000 X 100
80,000
Factory overhead rate = 125%

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Job Order Costing
Chapter # 3
Computation of Factory Overhead (Work in Process Ending Inventory):
Factory overhead = Direct labour x Factory overhead rate
Factory overhead = 20,000 x 125%
Factory overhead = Rs.25,000

Computation of Raw Material (Work in Process Ending Inventory):

Work in process ending inventory 70,000
Less: Direct labour (ending work in process) (20,000)
Less: Factory overhead (ending work in process) (25,000)
Raw material (ending work in process) Rs.25,000

M/S. _______
General Journal
Date Particulars P/R Debit Credit
1 Work in process 290,000
Raw material 110,000
Accrued payroll 80,000
Factory overhead applied 100,000
(To record the manufacturing cost)
2 Finished goods 280,000
Work in process 280,000
(To record the goods completed and transferred
to finished goods)
3 Cost of goods sold 280,000
Finished goods 280,000
(To record the cost of goods sold)
4 Accounts receivable 340,000
Sales 340,000
(To record the goods sold on account)

ILLUSTRATION # 4: (DIFFERENT JOBS)

The following transactions relate to the Crescent Company for the month of May, 2008.
(1) Materials purchased on account Rs.400,000.
(2) Materials and labour used on jobs were s under:
Jobs Direct Materials (Rs.) Direct Labours (Rs.)
Job No. M1 27,000 33,000
Job No. M2 12,000 15,000
Job No. M3 41,000 45,000
Indirect materials Rs.10,000.
Indirect labour Rs.13,000.
(3) Other factory overhead cost incurred Rs.60,000.
(4) Factory overhead is applied at 100% of direct labour.
(5) Jobs No. M1 and M2 were completed and customers were billed with Rs.130,000 and
Rs.68,000 respectively.
REQUIRED
Prepare the necessary entries to record the above transactions.

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 Job Order Costing
Chapter # 3

SOLUTION # 4:
Crescent Company
General Journal
Date Particulars P/R Debit Credit
1 Raw material 400,000
Accounts payable 400,000
(To record the purchase of raw materials)
2 Work in process 80,000
Factory overhead 10,000
Raw material 90,000
(To record the raw material issued to factory)
3 Work in process 93,000
Factory overhead 13,000
Accrued payroll 106,000
(To record the direct and indirect labour used)
4 Factory overhead 60,000
Accounts payable 60,000
(To record the factory overhead cost incurred)
5 Work in process 93,000
Factory overhead applied 93,000
(To record the applied factory overhead cost)
6 Finished goods 135,000
Work in process 135,000
(To record the goods completed and transferred
to finished goods)
7 Cost of goods sold 135,000
Finished goods 135,000
(To record the cost of goods sold)
8 Accounts receivable 198,000
Sales 198,000
(To record the goods sold on account)
9 Over applied factory overhead 10,000
Cost of goods sold 10,000
(To adjust the factory overhead)

Computation of Jobs Started and Completed:

Job No. M1 Job No. M2 Job No. M3 Total
Jobs Started:
Direct material 27,000 12,000 41,000 80,000
Direct labour 33,000 15,000 45,000 93,000
Factory overhead 33,000 15,000 45,000 93,000
Total 93,000 42,000 131,000 266,000
Jobs Completed: 93,000 42,000 --- 135,000
Jobs in Process: 131,000 131,000

Factory Overhead
2 Raw material 10,000 5 Work in process 93,000
3 Accrued payroll 13,000
4 Accounts payable 60,000
9 Cost of goods sold 10,000
93,000 93,000

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Job Order Costing
Chapter # 3

PRACTICE QUESTIONS
Question # 1: 2004 – Private (Cost Accounting) – UOK
The following information relates to a manufacturing company:
1. Purchase of direct material on account Rs.175,000.
2. Direct material used Rs.160,000.
3. Direct labour used Rs.100,000.
4. Direct labour paid Rs.95,000.
5. Factory overhead incurred on account Rs.77,000.
6. Factory overhead is applied at 80% of direct labour.
7. Jobs with total cost of Rs.30,000 were completed.
8. Units costing Rs.280,000 were sold on account for Rs.340,000.
REQUIRED
Give journal entries for the above transactions.

Question # 2: 2008 – Private (Advanced & Cost Accounting) – UOK

Skyline Co. uses Job Order Cost System. The manufacturing operations for the year ended
December 31, 2007 were as follows:
(1) Purchased raw materials on account Rs.72,000.
(2) Materials issued to factory of Rs.64,500 of which Rs.4,500 was indirect materials.
(3) Direct labour cost incurred Rs.58,000 and Rs.4,800 indirect labours.
(4) Factory overhead application rate was 80% on direct labour cost.
(5) Factory overhead cost incurred on account Rs.35,000.
(6) Cost of jobs completed Rs.150,000.
(7) Cost of jobs Rs.130,000.
(8) Sales on account Rs.170,000.
REQUIRED
Record all the above transactions in the General Journal & give an entry to close the factory
overhead account.

Question # 3: 2005 – Regular (Cost Accounting) – UOK

Meer and Company uses job order cost system. The following data summarize the operations
relating to production for June 2005:
(a) Materials purchased on account Rs.104,000.
(b) Materials requisitioned Rs.99,000 of which Rs.3,000 was for general factory use.
(c) Factory labour used Rs.84,000 of which Rs.11,000 was factory overhead.
(d) Other costs for factory overhead were incurred on account Rs.17,000.
(e) Prepaid insurance expired for factory overhead was Rs.1,000.
(f) Depreciation of factory equipment was Rs.9,000.
(g) Factory overhead cost applied to jobs Rs.40,000.
(h) Jobs completed Rs.210,000.
(i) Cost of goods sold Rs.197,000.
REQUIRED
Entries in general journal to record the summarized operations.

Question # 4: 2009 – Private (Advanced & Cost Accounting) – UOK

The following information relates to Sakina Industries for the month of December 2009.
1. Purchase materials on account Rs.90,000.
2. Issued materials to Rs.80,000 which included indirect materials of Rs.10,000.
3. Labour costs accrued:
Direct Rs.45,000 and indirect Rs.15,000.
4. Indirect manufacturing costs other than indirect material and indirect labour incurred
on account Rs.19,000.
5. Factory overhead costs applied @ 90% of direct labour cost.

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Chapter # 3
6. Goods costing Rs.120,000 were completed (finished).
7. 80% of the completed goods were sold at 20% above cost.
REQUIRED
Prepare journal entries for the above information including all adjusting and closing entries.

Question # 5: 1990 – Regular & Private (Advanced & Cost Accounting) – UOK
The Moon Company Ltd. uses job order cost system. The transactions for the month of July 1990
are given below:
(a) Purchased materials on account for Rs.95,000.
(b) Defective materials worth Rs.5,000 were returned to the supplier.
(c) Materials issued to factory: direct materials Rs.80,000 and indirect materials Rs.3,000.
(d) Labour used Rs.90,000 of which Rs.72,000 is direct labour.
(e) Factory overhead cost incurred on account of Rs.16,000.
(f) Depreciation on machinery was Rs.5,000.
(g) Factory overhead rate is applied at 60% of direct labour cost.
(h) Cost of goods completed and transferred to finished goods store Rs.150,000.
(i) Sold finished goods costing Rs.120,000 on account at 30% above cost.
(j) Balance of factory overhead account was closed into cost of goods sold account.
REQUIRED
(1) Give entries in General Journal to record the above transactions.
(2) Prepare factory overhead account and goods in process account.

Question # 6: 1991 – Regular & Private (Advanced & Cost Accounting) – UOK
Mustafa Jatoi Manufacturing Company uses job order cost system. Manufacturing operations for
January – December 1990 were as under:
(a) Purchased materials on account Rs.750,000
(b) Defective materials were returned 20,000
(c) Direct materials were issued to jobs 625,000
(d) Indirect materials were issued to factory 25,000
(e) Direct labour cost incurred was 720,000
(f) Indirect labour cost incurred was 75,000
(g) The applied factory overhead cost amounted to 480,000
(h) Factory overhead cost on account was 390,000
(i) Factory depreciation cost was estimated at 40,000
(j) The jobs were completed for 1,460,000
(k) Finished goods costing were sold 1,200,000
(l) The finished goods were sold on account for 1,800,000
REQUIRED
Prepare entries in the General Journal showing all computations.

Question # 7: 2007 – Private (Advanced & Cost Accounting) – UOK

Danish Corporation produces special product as to customer specifications and uses the job
order cost system. The following data relates to its operations of December 2006.
(1) Purchased raw material on account Rs.60,000.
(2) Raw material issued to factory Rs.43,000 of which Rs.4,000 was used indirectly.
(3) Factory labour used direct Rs.65,000 and indirect Rs.5,500.
(4) Factory overhead cost incurred on account Rs.44,000.
(5) Factory overhead applied at 100% of direct labour cost.
(6) Jobs were completed to the extent of 80%.
(7) Goods sold on account Rs.200,000.
(8) Finished goods inventory on Dec. 31, 2006 is Rs.18,400.

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REQUIRED
Record the above transactions in journal also close over or under applied factory overhead at
the end of month.

Question # 8: 1997 – Regular (Advanced & Cost Accounting) – UOK

Ahsan Corporation produces special product as to customer specifications and uses the job
order cost system. The following data relates to its operations for the month of December 1996:
(1) Purchased raw material on account Rs.42,000.
(2) Raw material issued to factory Rs.33,000 of which Rs.3,000 was used indirectly.
(3) Labour used: Direct Rs.50,000 and indirect Rs.5,000.
(4) Factory overhead cost incurred on account Rs.40,000.
(5) Factory overhead applied at 100% of direct labour cost.
(6) Jobs were completed to the extent of 90%.
(7) Goods sold on account Rs.170,000.
(8) Finished goods ending inventory valued at Rs.10,000.
REQUIRED
Record the above transactions in journal also close the factory overhead account.

Question # 9: 2004 – Regular (Cost Accounting) – UOK

Raza Corporation produces special products to customer’s specifications and uses job order cost
system. The following transactions relates to its operations for the month of December 2003:
(1) Purchase of raw material on account Rs.50,000.
(2) Material issued to production Rs.66,000 out of which Rs.6,000 was used indirectly.
(3) Labour used direct Rs.100,000 indirect Rs.10,000.
(4) Factory overhead cost incurred Rs.80,000.
(5) Factory overhead applied 100% of direct labour cost.
(6) Jobs were completed to the extent of 95%.
(7) Goods sold on account Rs.172,500, including G.S.T. @ 15%.
(8) Finished goods inventory valued at Rs.15,000.
REQUIRED
Pass necessary journal entries and close the factory overhead account.

Question # 10: 2000 – Regular & Private (Advanced & Cost Accounting) – UOK
Sunshine Co. uses a job order cost accounting system. The following information was provided
for the month of March:
a) Purchases of direct materials during the month amounted to Rs.59,700/= on account.
b) Materials requisitions issued by the production department during the month total to
Rs.56,200/=.
c) Time cards of direct workers show 2,000 hours worked on various jobs during the
month, for total direct labour cost of Rs.30,000/=.
d) Direct workers were paid Rs.26,300/= in March.
e) Actual overhead costs for the month amounted to Rs.34,900/=.
f) Overhead is applied to jobs at a rate of Rs.18/= per direct labour hour.
g) Jobs with total accumulated cost of Rs.116,000/= were completed during the month.
h) On March 31, finished goods inventory was valued at Rs.22,000/=.
i) During March finished goods were sold for Rs.128,000.= on account.
REQUIRED
Prepare general journal entries for each of the above transactions (including cost of goods sold
and closing of factory overhead account).

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 Job Order Costing
Chapter # 3
Question # 11: 2011 – Private (Advanced & Cost Accounting) – UOK
The Hamza Printers (Pvt) Ltd. uses job order cost system. The transactions for the month of
September, 2011 are given below:
a) Material purchased on account Rs.5,800,000 including 16% sales tax.
b) Material requisition for production Rs.3,500,000 and supplies Rs.500,000.
c) Material return to supplier Rs.116,000 including 16% sales tax.
d) Accrued payroll Rs.825,000 including payroll for indirect labour Rs.125,000.
e) Paid factory electricity bill Rs.425,000 including sales tax Rs.57,600 and income tax
Rs.7,400.
f) Paid factory gas bill Rs.16,240 including sales tax Rs.2,240.
g) Other manufacturing expenses incurred Rs.150,000.
h) FOH applied at the rate of 175% of direct labour cost.
i) Goods in process inventory on September 30, Rs.542,500.
j) Finished goods inventory on September 30, Rs.882,500.
k) Sales on account Rs.6,032,000 including 16% sales tax.
REQUIRED
Prepare General Journal entries for each of the above transactions including entries for cost of
goods sold and closing factory overhead account.

Question # 12: 2000 – Regular & Private (Advanced & Cost Accounting) – UOK
Hakeem & Company reported the following inventories on 1st November, 2001.
Raw material inventory Rs.45,000
Goods in process inventory 60,000
Finished goods inventory 37,000
The company uses the job order cost accounting system. The following transactions took place
during November:-
a) Material purchased on account Rs.150,000.
b) Material requisition for production Rs.90,000 and supplies Rs.20,000.
c) Material returned to supplier Rs.6,000.
d) Accrued payroll Rs.105,000 including payroll for indirect labour Rs.15,000.
e) Sundry manufacturing expenses incurred Rs.110,000.
f) Paid to accounts payable Rs.56,000.
g) Collected from accounts receivable Rs.90,000.
h) Factory overhead applied at the rate of 110% of direct labour cost.
i) Goods in process inventory November 30, Rs.65,000.
j) Finished goods inventory November 30, Rs.55,000.
k) Sales on account Rs.405,000.
REQUIRED
Prepare General Journal entries for each of the above transactions (including entries for cost of
goods manufactured, cost of goods sold and closing factory overhead account).

Question # 13: 1992 – Regular (Advanced & Cost Accounting) – UOK

The Shalimar Manufacturing Company uses job order cost system. The ledger accounts show the
following inventories at the beginning and ending of August 1992:
Inventories: 1 August (Rs.) 31 August (Rs.)
Goods in process 20,000 50,000
Raw material 30,000 55,000
Finished goods (1,000 units opening) 50,000 120,000
The manufacturing operations for the month of August 1992 are summarized below:
(a) Purchased material costing Rs.200,000 on account.
(b) Issued Rs.150,000 worth direct material and Rs.25,000 worth indirect material for
production.

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(c) The payroll for the month amounted to Rs.100,000 for direct labour and Rs.9,000 for
indirect labour.
(d) Factory overhead cost incurred on account Rs.46,000.
(e) The applied factory overhead is at 80% of direct labour cost.
(f) Goods completed during the month (5,000 units) Rs.300,000.
(g) Sold finished goods on account (4,000 units) at Rs.250,000. Use first in first out method
in crediting finished goods account.
REQUIRED
(1) Give necessary journal entries for all the above transactions.
(2) Prepare T – accounts for raw material, goods in process, and finished goods and
complete in all respects.

Question # 14: 1987 – Regular & Private (Advanced & Cost Accounting) – UOK
Ansar Manufacturing Company uses job order cost system. The ledger accounts show the
following inventories:
Inventories: 31 January (Rs.) 1 January (Rs.)
Raw materials 15,000 10,000
Work in process 24,500 20,000
Finished goods 20,000 10,000
The manufacturing operations for the month of January 1986 are summarized as follows:
(a) Materials purchased on account Rs.40,000.
(b) Material returned to suppliers Rs.2,000.
(c) Materials issued to jobs for Rs.33,000.
(d) Labour used Rs.20,000 of which Rs.15,000 was used directly.
(e) Depreciation on machinery Rs.2,000.
(f) Factory overhead cost incurred Rs.15,000.
(g) The factory overhead rate is applied 110% of direct labour cost.
(h) The jobs were completed and shipped to customers at a billed price of Rs.80,000.
REQUIRED
Give the necessary journal entries and prepare T – accounts for raw materials, work in process,
and finished goods and complete in all respect.

Question # 15: 1997 – Private (Advanced & Cost Accounting) – UOK

The Sindh Manufacturing Company uses job order cost system. The transactions for the month
of March 1996 are given below:
(1) Purchased raw material costing Rs.95,000 on account.
(2) The raw material account shows a debit balance of Rs.15,000 on 31 March 1996.
(3) Direct labour cost incurred Rs.120,000.
(4) Factory overhead rate is applied 90% of direct labour cost.
(5) The completed jobs were shipped to customers at a billed price Rs.350,000.
Note: Raw material Rs.10,000 and direct labour cost Rs.7,000 are included in the goods in
process on 31 March 1996 (Factory overhead is applied on the basis of direct labour
cost).
REQUIRED
(a) Prepare General Journal entries and setup work in process account.
(b) Compute the cost of goods in process inventory 31 March 1996.

Question # 16: 1992 – Private (Advanced & Cost Accounting) – UOK

The following data relate to Khurram Farooqui manufacturing Company for the month of
December 1991:
(1) Purchased raw material on account Rs.65,000.
(2) The raw material account shows a debit balance of Rs.20,000 on 31 December 1991.
(3) Direct labour cost Rs.100,000.

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 Job Order Costing
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(4) Factory overhead incurred and applied Rs.80,000.
(5) The completed jobs were shipped to customers at a billed price Rs.300,000.
Note: Raw material Rs.5,900 & direct labour cost Rs.4,500 are included in the goods in process
on 31 December 1991 (Factory overhead is applied on the basis of direct labour cost).
REQUIRED
(a) Record the above transactions in the General Journal.
(b) Compute the cost of goods in process inventory 31 December 1991.
(c) Prepare a condensed Income Statement for 31 December 1991.

Question # 17: 2005 – Private (Cost Accounting) – UOK

The following data relate to Dada Bhai Manufacturing Co. for its operations for April 2004:
1. Purchase of raw material on account for Rs.32,500.
2. Raw material account shows a debit balance of Rs.10,000 on April 30, 2004.
3. Direct labour cost incurred Rs.50,000.
4. Factory overhead incurred Rs.40,000.
5. The jobs were completed and shipped to customers at a billed price of Rs.150,000.
6. The factory overhead is applied on the basis of direct labour cost.
7. Goods in process on April 30, 2004 were as:
Raw material ................................ Rs.2,950.
Direct labour cost....................... Rs.2,250.
REQUIRED
1. Give necessary journal entries for the above transactions.
2. Compute the cost of goods in process on April 30, 2004.
3. Prepare a condensed income statement.

Question # 18: 2006 – Regular (Cost Accounting) – UOK

The following data relate to Irfan Manufacturing Company for its operation for the year ended
December 31, 2005.
Raw material purchased on account Rs.200,000.
Raw Material Issued to Factory:
Direct 140,000
Indirect 20,000
Labour Used:
Direct labour for production 240,000
For general use 24,000
Other FOH incurred on account Rs.180,000.
90% of the FOH have been applied on the work-in-process account on the basis of direct labour
cost.
Goods valued Rs.516,000 were transferred from factory to godown as complete. Finished goods
costing Rs.66,000 were in the ending inventory and the rest were sold at 20% above cost.
REQUIRED
(i) Give General Journal entries to record the above transactions and setup work-in-
process, finished goods and factory overhead account.
(ii) To close the factory overhead accounts.

Question # 19: 2006 – Regular (Cost Accounting) – UOK

The following information appears in the work in process inventory account:-
Work in Process Inventory
Balance October 1, 7,200 Transfer to finished goods
Direct material 12,000 Inventory account 30,000
Direct labour 9,000 Balance October 31, 9,000
Factory overhead 10,800
39,000 39,000

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Factory overhead is applied as a percentage of direct labour cost, direct labour charged to goods
in process at October 31, is estimated to be Rs.3,000. 75% of the goods finished during October
are sold for cash Rs.27,000 and the remaining 25% of finished goods are sold on credit Rs.9,500.
REQUIRED
a) Factory overhead percentage on direct labour cost.
b) Factory overhead applied and direct materials used on goods still in process at October 31.
c) General journal entries to record:
(1) Manufacturing costs charged to production during October.
(2) Transfer of production to finished goods warehouse during October.
(3) Cash sales.
(4) Credit sales.

Question # 20: 2006 – Private (Cost Accounting) – UOK

Master Sons uses job order cost system. Factory overhead charged to individual jobs through
the use of predetermined overhead rate-based on direct labour cost.
The following appears in the company’s goods in process account for the month of Jan 2006.
Debit to Account:
Balance Jan. 01, 2006 Rs.10,300
Raw material Rs.15,000
Direct labour Rs.9,000
Factory overhead Rs.11,700
Rs.46,000
Credit to Account:
Transferred to finished goods account Rs.34,000
Balance Jan. 31, 2006 Rs.12,000
REQUIRED
(1) Determine the overhead application rate used by the company.
(2) Assuming that the direct labour charged to the job still in process at Jan. 31, amounts to
Rs.3,000. Compute the amount of FOH and amount of raw material which have been
charged to these jobs as of Jan. 31, 2006.
(3) Prepare General Journal entries to record:
(a) The manufacturing cost (Material, labour & O.H).
(b) The transfer of production completed during Jan. 31, to the finished goods
inventory accounts.
(c) The credit sales of total finished goods completed at 30% above cost.

Question # 21: 1996 – Regular (Advanced & Cost Accounting) – UOK

Sheikh Sons uses job order cost accounting system. Factory overhead is charged to individual
jobs through the use of predetermined overhead rate-based on direct labour cost.
The following information appears in the company’s goods in process account for the month of
June:
Debits to Account: Rs.
Balance 1 June 8,300
Raw material 12,000
Direct labour 9,000
Factory overhead (applied to jobs as a percentage of direct labour cost) 11,700
41,000
Credits to Account:
Transferred to finished goods inventory 32,000
Balance 30 June 9,000
REQUIRED
(1) Compute the predetermine overhead application rate used by the company.

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(2) Assuming that the direct labour charged to the job still in process at June 30, amounts to
Rs.2,400. Compute the amount of factory overhead and amount of raw material which have
been charged to these jobs as of June 30.
(3) Prepare General Journal entries to summarize:
(a) The manufacturing cost (Material, labour & overhead) charged to production during June.
(b) The transfer of production completed during June to the finished goods inventory accounts.
(c) The cash sales of 90% of the merchandise completed during June, at a total sales price of
Rs.46,500. Show the related cost of goods sold in a separate journal entry.

Question # 22: 1993 – Regular (Advanced & Cost Accounting) – UOK

Margoob Company uses job order cost accounting system. The following information appears in
the goods in process controlling account for the month of June 1993 and company uses FIFO
method:
Goods in Process
Debits to Accounts (Rupees) Credits to Accounts (Rupees)
Balance 1 June 1993 8,000 Transfer to finished goods
Direct materials 20,000 Inventory account ?
Direct labour 12,000 Balance 30 June, 1993 8,500
Manufacturing overhead incurred 14,000
on account
54,000 54,000
Over-applied factory overhead Rs.400 and used factory overhead rate based on direct labour
cost. 90% completed units sold on account for Rs.50,000.
REQUIRED
a) Assuming that the direct labour charged to the job still in process at June 30, 1993
amounts to Rs.2,100. Compute the amount of manufacturing overhead applied and the
amount of direct material which have been charged to these jobs as of June 30.
b) Pass the journal entries relating:
i) Manufacturing costs.
ii) Completed goods transferred to finished goods inventory.
iii) Cost of goods sold.
iv) Credit sales.
v) Factory overhead incurred.
vi) Close over-applied factory overhead to cost of goods sold.
c) Prepare revised goods in process account.

Question # 23: 2002 – Regular & Private (Cost Accounting) – UOK

The following transactions relate to the Decent Corp. for the month of June, 2002.
(1) Materials purchased on account.................................................... Rs.170,000.
(2) Materials and labour used on jobs were s under:
Direct Materials Direct Labours
Job No. 1 Rs.11,400 Rs.14,000
Job No. 2 Rs.5,000 Rs.7,000
Job No. 3 Rs.17,200 Rs.18,400
Indirect materials Rs.3,800.
Indirect labour Rs.5,500.
(3) Other factory overhead cost incurred .............................................. Rs.6,850.
(4) Depreciation on machinery .................................................................. Rs.3,000.
(5) Factory overhead is applied at 80% of direct labour.
(6) Jobs No. 1 and 2 were completed and customers were billed with Rs.50,000 and
Rs.26,000 respectively.
REQUIRED
Prepare the necessary entries to record the above transactions.

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Question # 24: 1995 – Private (Advanced & Cost Accounting) – UOK
The following data relates to M/S. Al-Mansoor Co. for the month of September 1995, who
maintains job order cost system.
(1) Materials purchased on account Rs.120,000.
(2) Materials requisitioned and factory labour used:
Job No. Material (Rs.) Factory Labour (Rs.)
Job No. 501 13,000 19,000
Job No. 502 9,000 15,520
Job No. 503 22,400 14,080
Job No. 504 17,600 20,800
Job No. 505 14,000 7,200
Job No. 506 7,000 3,600
For general factory use 3,800 7,400
(3) Factory overhead cost incurred on account Rs.68,800.
(4) Depreciation of machinery Rs.10,400.
(5) The factory overhead rate is 110% of direct labour cost.
(6) Jobs completed: No. 501, 503, 504 and 506.
(7) Jobs No. 501, 503 and 504 were shipped and customers were billed for Rs.84,000,
Rs.85,000 and Rs.100,000 respectively.
REQUIRED
(a) Pass necessary journal entries to record the information summarized above.
(b) Prepare accounts in ledger of the company for the accounts work – in – process and
finished goods.

Question # 25: 1993 – Private (Advanced & Cost Accounting) – UOK

Arsalan Manufacturing Company uses a job order cost system. The following data summarizes
the operations to production for April 1993:
(1) Raw materials purchased on cash Rs.40,000.
(2) Raw materials purchased on account Rs.20,000.
(3) Raw materials requisitioned and direct labour used:
Job No. Raw Material (Rs.) Direct Labour (Rs.)
Job No. 11 6,500 9,500
Job No. 12 5,400 7,760
Job No. 13 11,200 7,040
Job No. 14 8,800 10,400
Job No. 15 7,000 3,600
Job No. 16 3,500 1,800
For general factory use 1,900 3,700
(4) Factory overhead cost incurred on account Rs.34,200.
(5) Depreciation of machinery Rs.5,200.
(6) The factory overhead rate is 110% of direct labour cost.
(7) Jobs completed: No. 11, 13, 14 and 16 and transferred to finished goods warehouse.
(8) Jobs No. 11, 13 and 14 were sold on account at a cost of Rs.42,000, Rs.45,000 and
Rs.50,000 respectively.
REQUIRED
(a) Entries in General Journal to record the foregoing operations.
(b) Setup T – accounts of raw material, work in process, and finished goods.
(c) Bring down the end of the month balances.

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Question # 26: 2013 – Regular (Advanced & Cost Accounting) – UOK
Mehran Manufacturing Company uses job order system. The following data are for April 2012:
a. Raw material purchased for cash Rs.20,000.
b. Raw material purchased on account Rs.10,000.
c. Raw material requisitions and direct labour hours:
Job No. Raw Material (in Rs.) Direct Labour Hours
2A Rs.7,000 250
3B Rs.5,000 380
5D Rs.3,000 400
7F Rs.1,000 120
8G Rs.2,000 210
d. Factory overhead applied @ Rs.5 per direct labour hour and direct labour cost @ Rs.7
per direct labour hour.
e. Depreciation of office premises Rs.2,000 and for factory machinery Rs.4,000.
f. Factory overhead incurred on account Rs.500 per job.
g. Job number 3B, 7F and 8G were completed and transferred to stockroom.
h. Job number 7F and 8G were sold on account for Rs.13,000 and Rs.16,000 respectively.
REQUIRED
(i) Pass entries in General Journal.
(ii) Setup T – accounts for raw material, work – in – process, finished goods and factory
overhead. Close and balance the accounts as the case may be.

Question # 27: 1988 – Regular & Private (Advanced & Cost Accounting) – UOK
The Millat Company uses job order costing. The following data were obtained from the
company’s records as of June 30:
Job No. Direct Material (Rs.) Direct Labour Hours
Job No. 1001 16,300 2,300
Job No. 1002 23,600 4,700
Job No. 1003 24,500 4,200
Job No. 1004 15,400 2,500
Job No. 1005 18,200 3,200
Job No. 1006 13,700 1,980
Direct labour is charged to job at an average cost of Rs.6 per direct labour hour. Factory
overhead is charged to jobs on the basis of Rs.3 per direct labour hour. Actual overhead totaled
Rs.870,000. During June, Job No. 1001, 1002, 1003, 1004, and 1005 were completed. Jobs No.
1001 and 1002 were shipped out and customers were billed for Rs.48,000 and Rs.82,000
respectively.
REQUIRED
Give journal entries to summarize the transactions for June and to close the factory overhead
account.

Question # 28: 2003 – Regular & Private (Cost Accounting) – UOK

The A.M. Company uses job order costing. At the beginning of June, two jobs were in process:
Job 101 Job 102
Material 3,500 4,700
Direct labour 10,000 5,000
Applied factory overhead 8,000 4,000
There was no inventory of finished goods on June 1, during June job 103, 104, 105, 106, 107 and
108 were started.
Material requisitions for June totaled Rs.30,000 direct labour cost Rs.45,000.
Factory overhead is applied 80% of direct labour cost.

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The only job still in process at the end of June 30 is No. 108 with cost of Rs.4,000 for material
and Rs.7,000 for the direct labour.
Job 107, the only finished job on hand at the end of June, has total cost of Rs.8,600.
REQUIRED
(1) Calculate work in process inventory on June 30 (Job no. 108).
(2) General Journal entries to record:
(a) Cost of goods manufactured.
(b) Cost of goods sold.
(c) Closing of over or under applied factory overhead.

Question # 29: 1998 – Regular (Advanced & Cost Accounting) – UOK

Mushtaq Company uses a pre-determined rate in applying factory overhead to individual
production orders. Overhead is applied in Department – A on the basis of machine hours and in
Department – B on the basis of direct labour hours. At the beginning of the year 1997
management made the following budget estimates:
Department – A Department – B
Direct labour Rs.275,000 Rs.960,000
Factory overhead Rs.540,000 Rs.600,000
Machine hours 360,000 Hours 4,500 Hours
Direct labour hours 125,000 Hours 500,000 Hours
Production No. 490 was started in the middle of January and completed two weeks later. The
cost records for the job show the following information:
Department – A Department – B
Job No. 490 – 2,400 units of product
Cost of raw material used on job Rs.2,300 Rs.7,600
Direct labour cost Rs.2,500 Rs.5,900
Machine hours 1,200 Hours 1,900 Hours
Labour hours 6,300 Hours 500 Hours
REQUIRED
(1) Determine the overhead rate that should be used in applying overhead costs to Job No. 490.
(2) What is the total cost of Job No. 490 and the unit cost of the product manufactured on this
production cost?

Question # 30: 2009 – Regular (Advanced & Cost Accounting) – UOK

On March 1, 2009 Azfar Engineering Works had two jobs in process as follows:
Job No. 18 Job No. 19
Direct material 50,000 18,000
Direct labour 36,000 12,000
Direct labour hours 10,000 8,000
Direct machine hours 3,000 2,500
Applied factory overhead Rs.3 per direct machine hour Rs.5 per direct labour hour
During March Job No. 20, 21, 22 and 23 were started. Direct materials of Rs.37,500 and direct
labour of 1,800 hours at an average rate of Rs.15 per hour used during the month. Pre-
determined F.O.H applied rate is Rs.10 per direct labour hour on all jobs starting in March.
Job No. 23 was the only incomplete job at the end of March. Direct material of Rs.15,000 and
direct labour of Rs.9,000 were charged to job. At the end of month job No. 22 was the only
finished job on hand. It had accumulated total cost of Rs.27,250.
There was no beginning inventory in finished goods. Jobs completed were sold on account at a
profit of 20% on cost.

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REQUIRED
(i) Prepare following T – account:
(a) Work in process (b) Finished goods
(c) Cost of goods sold
(ii) Prepare journal entries to record:
(a) Cost incurred on jobs started in the month of March
(b) Cost of goods manufactured
(c) Sales (d) Cost of sales

Question # 31: 1998 – Private (Advanced & Cost Accounting) – UOK

The following information has been taken from the job order cost system, used by Jahangeer
Sons:
Job No. Balance July 1 (Rs.) Production Cost in July (Rs.)
21 140,000 ---
22 108,000 ---
23 30,000 166,000
24 50,000 130,000
25 --- 200,000
26 --- 121,000
27 --- 80,000
During July Job No. 23, 24 and 25 were completed, and Job No. 21, 22 and 23 were sold on
account at 25% above cost.
REQUIRED
(a) Compute:
(1) Cost of finished goods inventory – beginning.
(2) Cost of goods in process inventory – beginning.
(3) Cost of finished goods inventory – ending.
(4) Cost of goods in process inventory – ending.
(5) Cost of goods manufactured.
(6) Cost of goods sold.
(7) Sales revenue.
(b) General Journal entries for (5), (6) and (7) above.

Question # 32: 2010 – Private (Advanced & Cost Accounting) – UOK

Ashar Engineering Works produces robotic arms according to customers’ specification. At
November 1, 2009 the jobs were in process:
Job No. Material Cost Labour Cost F. Overhead
201 A 4,000 2,000 20% of D. Lab.
215 B 8,000 4,000 15% of D. Lab.
230 C 8,300 2,200 1/4 of D. Lab.
Additional costs to complete the products during Nov.
Material Rs.20,000 allocated as follows:
Job No. 201 A 40% Job No. 215 B 25% Job No. 230 C 35%
Labour charges Rs.4,000 per job and factory overhead apply to all the jobs at 20% of direct
labour.
Units selling price:
Job No. 201 A Rs.4.4 Job No. 215 B Rs.5 Job No. 230 C Rs.3.6
All jobs were completed and sold during November.
REQUIRED
Prepare journal entry to record transfer of the jobs to the finished goods account.

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Question # 33: 2010 – Regular (Advanced & Cost Accounting) – UOK
On January 1, 2010 Mansoor Company has a debit balance of Rs.50,000 in material account.
During a month of January following transactions were completed:
(1) Purchased material from Zulfiqar Company Rs.120,000 which included 30% cash
purchases.
(2) Material issued to:
Job No. Direct Indirect
X 50,000 5,000
Y 40,000 4,000
Z 60,000 6,000
(3) Labours hours used:
Job No. Direct Indirect
X 200 Hours 20 Hours
Y 450 Hours 45 Hours
Z 800 Hours 80 Hours
(4) Labour rate is Rs.8 per direct labour hour.
(5) F. overhead applied at the rate of 80% of direct labour cost.
(6) Job No. X and Z were completed and transferred to finished goods.
(7) 30% of finished goods were sold on account to Naeem Traders at a profit of 25%.
REQUIRED
Prepare journal entries in the books of Mansoor Industries, showing computations.

Question # 34: 2013 – Private (Advanced & Cost Accounting) – UOK

A manufacturing company job cost records yielded the following information. The company has
a perpetual inventory system:
Job No. Date Total Costs of Job Total Manufacturing
Started Finished Sold at June 30 Costs Added in July
1 May 26 June 07 June 09 Rs.700 ---
2 June 03 June 12 June 13 1,700 ---
3 June 03 June 30 July 01 2,400 ---
4 June 17 July 24 July 27 200 Rs.500
5 June 29 July 29 August 03 400 1,600
6 July 08 July 12 July 14 --- 800
7 July 23 August 06 August 09 --- 300
8 July 30 August 22 August 26 --- 2,900
REQUIRED
(1) Compute cost of:
(a) Work in process inventory at June 30 and July 31.
(b) Finished goods inventory at June 30 and July 31.
(c) Cost of goods sold for June and July.
(2) Make summary journal entries to record the transfer of completed units from work in
process to finished goods for June and July.
(3) Record the sale of Job 4 for Rs.850.

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