CHAPTER 6 : JOB ORDER COSTING

QUESTION 1

The Barakah Company has two producing departments: assembly and finishing. The company
has been using a plantwide predetermined overhead rate based on direct labour hours. The
following estimates were made for the current year:

Assembly Finishing Total

Manufacturing overhead RM200,000 RM100,000 RM300,000
Direct labour hours 40,000 35,000 75,000
Machine hours 5,000 16,000 21,000

Mahoney started and completed Job 1512 during the year. The job-order cost sheet indicated
the following:

Materials requisitioned RM18,000

Direct labour costs RM16,000
Direct labor hours:
Assembly 1,700 hours
Finishing 1,300 hours
Machine hours:
Assembly 1,000 hours
Finishing 700 hours

A total of 2,000 units were produced on Job 1512.

Required:

a Assume that Barakah Company uses a plantwide predetermined overhead based on

. direct labour hours. Calculate the total costs and the unit cost for each of the 2,000 units
produced by Job 1512.

b Assume that Barakah Company uses separate departmental overhead rates based upon
. direct labour hours for assembly and upon machine hours for finishing. Calculate the total
costs and the unit cost for each of the 2,000 units produced by Job 1512.

QUESTION 2

The Hayat Auto Company builds equipment to customer's specifications. On March 1, two jobs
were in process with the following costs and informations:

Job 43 Job 44

Direct materials RM10,200 RM34,400

Direct labour 21,000 10,400
Applied overhead* 4,950 7,370
Total costs $36,150 $52,170

Machine hours 45 67
*Applied on the basis of machine hours

During March, Job 45 was started and Job 44 was completed and delivered to the customer.
Job 43 was missing a part that was backordered and would be completed in June. The
following costs were incurred in March:

Job 43 Job 44 Job 45

Direct materials RM2,300 RM4,500 RM12,700
Direct labour RM2,400 RM3,300 RM4,500
Machine hours 21 11 23

It is Hayat Auto Company policy to bill clients at cost plus 40 percent.

Required:

a Calculate the overhead rate that Hayat Auto Company is using.

.

b Calculate the overhead applied to each job during the month of March.
.

c. Calculate the balance in work in process on March 31.

d What was the price of Job 44?

.

QUESTION 3

During March, the following transactions occurred at Sinar Mentari, Inc.:

1. Materials were purchased on account for RM24,000.

2. Materials totaling RM20,000 were requisitioned for use in production.
3. Direct labour payroll for the month was RM30,000 with an average wage of RM10
per hour.
4. Actual overhead of RM28,000 was incurred and paid.
5. Factory overhead was charged to production at the rate of RM11 per direct labour
hour.
6. Completed units costing RM52,000 were transferred to finished goods.
7. Units costing RM44,000 were sold on account at 145 percent of cost.

Beginning balances as of March 1 were as follows:

Materials RM6,500
Work in Process 8,000
Finished Goods 7,000
Required:

a. Prepare the journal entries for the above transactions.

b. Calculate the ending balances of the following accounts:

Materials
Work in Process
Finished Goods Inventory
Manufacturing Overhead