Chapter 5: Job Order Costing

Problems

1. You have applied for a cost accounting position with Chelsea Containers. The company controller asked all
candidates to take a quiz to demonstrate their knowledge of job order costing. Chelsea’s job order costing system
is based on normal costs, and overhead is applied based on direct labor cost. The following information
pertaining to May has been provided to you:
Job No. DM DL Applied OH Total Cost
67 $ 35,406 $ 13,840 $ 15,916 $ 65,162
69 109,872 14,480 16,652 141,004
70 2,436 4,000 4,600 11,036
71 308,430 57,000 ? ?
72 57,690 4,400 5,060 67,150

You are informed that Job #68 was completed in April. You are also told that Job #62 was the only job in process
at the beginning of May. At that time, the job had been assigned $25,800 for DM and $7,200 for DL. At the end
of May, Job #71 had not been completed; all others were complete. Answer the following questions required:

a. What is Chelsea Containers’ predetermined overhead rate?

b. What was the total cost of beginning Work in Process Inventory?
c. What were total direct manufacturing costs incurred for May?
d. What was the cost of goods manufactured for May?

2. All jobs at Frankfurt Inc., which uses a job order costing system, go through two departments (Fabrication and
Assembly). Overhead is applied to jobs based on machine hours in Fabrication and on direct labor hours in
Assembly. In December 2022, corporate management estimated the following production data for 2013 in
setting