1. What are the fundamental characteristics of Job-Order Costing System?

answer:

 Costs are being accumulated by job, whether exclusive, multiple similar or dissimilar products,
which have been produced following customer specifications.
 Each job is treated as independent cost object.
 It measures the costs for each completed job.
 Maintains only one wok-in-process inventory control account in the general ledger but is
supported by subsidiary ledgers.
 Each job is distinct and separate, separate subsidiary ledgers are being maintained to account
for the cost of different jobs.
 Before starting a specific job, a source document called material requisition from is being
prepared first so materials can be purchased or issued to production, and an employee
timesheet is being kept to monitor the hours worked on specific job properly.
 Maintains a job-order cost sheet to account for costs incurred in custom-made products
appropriately.

PROBLEM SOLVING:

PROBLEM 1.
Requirement 1. Journalize the January transactions.

a. Materials 229,040
Accounts Payable 229,040

To record Purchases.
Computations:
Material X 20,000unitsx5.20= 104,000
Material Y 24,000unitsx3.75= 90,000
Indirect Materials 229,040

b. Payroll 220,000

Withholding taxes 31,000

SSS Premiums 7,000

Medicare Contributions Payable 440

Pag-ibig Funds Contributions Payable 6,600

Accrued Payroll 174,960

Accrued Payroll 174,960

Cash 174,960

Payroll for the month.

c. Work in Process- Job 101 40,000

Work in Process- Job 102 80,000

Work in Process- Job 103 36,000

Factory Overhead Control 24,000

Marketing &Administrative Expense Control 40,000

Payroll 220,000

Classification of Payroll.

d. Work in Process
 Job 101 103,200

Job 102 84,000

Job 103 29,150

Factory Overhead Cost 15,040

Materials 231,390

To record materials issued to production.

e. Work in Process

Job 101 22,500

Job 102 36,000

Job 103 27,000

Factory Overhead Applied 85,500

Factory Overhead Applied

Factory overhead applied to production.

f. Accounts Receivables 510,000

Sales 510,000

Cost of goods sold 380,700

Work in Process 380,700

To record sales and cost of units sold.

g. Cash 494,000

Sales Discount 26,000

Accounts Receivable 520,000

To record collections and discount.

h. Marketing and Administration Expense Control 30,000

Factory Overhead Control 25,600

Cash 51,600

Accumulated Depreciation 4,000

i. Accounts Payable 170,000

Cash 170,000

J. Factory Overhead Applied 85,500

Cost of goods Sold 61,100

Factory Overhead Control 79,400

 JOB ORDER COST SHEET
Job Number: 101 Date Started: 12/31/2019
Customer: Date Completed: 1/1/2020
Units Completed:

Direct Materials Direct Labor Applied Overhead

Units/Type Cost Hours Cost Rate/Hour Amount
1000/beg. 5000 1000 hrs 4000 1000/beg. 2000
4000/X 20,000 10,000 hrs 40,000 10,000 22,500
16,000/X 83,200
TOTAL 108,200 TOTAL 44,000 TOTAL 24,500

JOB ORDER COST SHEET

Job Number: 102 Date Started12/31/2019
Customer: Date Completed: 1/1/2020
Units Completed:

Direct Materials Direct Labor Applied Overhead

Units/Type Cost Hours Cost Rate/Hour Amount
400/beg. 1,200 400 hrs 2,000 400hrs/2.00 800
8000/Y 24,000 16,000 hrs 80,000 16,000hrs/2.25 36,000
16,000/Y 60,000
TOTAL 85,200 TOTAL 82,000 TOTAL 36,800

JOB ORDER COST SHEET

Job Number: 103 Date Started: 12/31/2019
Customer: Date Completed: 1/1/2020
Units Completed:

Direct Materials Direct Labor Applied Overhead

Units/Type Cost Hours Cost Rate/Hour Amount
2,000/X 10,400 12,000hrs 36,000 12,000hrs/2.25 27,000
5,000/Y 18,750

TOTAL 29,150 TOTAL 36,000 TOTAL 27,000

 GOLDEN SHOWER COMPANY

Cost of Goods Sold Statement

As of January 1 2020

Direct Materials:

Materials, January 1 44,000

Purchases 229,040
Total Materials Available for use 273,040

Less: Materials, December 31 32,690

Indirect Materials 24,000 (59,690) 216,350

Direct Labor 156,000

Factory Overhead 85,000

Total Manufacturing Cost 457,850

Add: Work in Process, January 1 15,000

Cost of goods put into process 472,850

Less: Work in process, December 31 (92,150)

Cost of goods manufactured 380,700

Add: Finished goods, January 1 65,000

Total goods available for sale 445,700

Less: Finished goods, December 31 (65,000)

Cost of goods sold-normal 380,700

Add: Underapplied factory overhead (6,100)

Cost of goods sold- actual 374, 600

Computations: Over/Under applied FO

( c) 24,000

(d) 14,760
(h) 25,600

Total FO control 79,400

(e) FO applied (85,500)

Over-applied FO (6,100)
Problem 2.

Requirement 1. Labor hours are used to determine the predetermined overhead rate. What is the
predetermined overhead rate per direct labor hour?

Computation:

Estimated Overhead (exclusive for spoilage) $160,000

(Estimated) Spoilage $25,000

Less: sales Value of Spoiled frames ($11,500)

$173,500

Divided by: Labor Hours 100,000

$1.735 per Direct Labor Hours

Requirement 2. Journal Entries

Spoiled Goods Inventory 680

Factory Overhead Cost 510

Work In Process 1,190

Computations:
SG I 170 frames x $4 680

FOC 170 frames x $3 510

WIP 170 x $7 1,190

Requirement 3. Journal entry job #12 .

Spoiled Goods Inventory 680

Work in Process 680