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Job order costing

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2-9. Recording Labor Cost in Job-Order Costing

Johnson Products had the following labor time tickets for the month of February:
a. Calculate the amount of direct labor cost assigned to each job.
b. Summarize the labor time tickets and prepare a journal entry to record direct labor
for the month:

2-12. Allocating Manufacturing Overhead to Jobs

Webber Fabricating estimated the following annual costs:
Expected annual direct labor hours 40,000
Expected annual direct labor cost $600,000
Expected machine hours 15,000
Expected material cost for the year $800,000
Expected manufactwing overhead $900,000

a. Calculate overhead allocation rates using each of the four possible allocation bases

b. Determine the cost of the following job (number 253) using each of the four overhead
allocation rates.

Job 253
Direct materials $2,500
Direct labor (140 hrs @l1/hr) $1,540
Machine hours used 100
2-1. Cost of Goods Manufactured, Cost of Goods Sold, and Income

The following information is available for Satterfield's Custom Glass for the fiscal year
ending December 31, 2008.

Beginning balance in Work in Process $200,000
Ending balance in Work in Process 275,000
Beginning balance in Finished Goods 450,000
Ending balance in Finished Goods 300,000
Direct material cost 2,000,000
Direct labor cost 2,500,000
Manufacturing overhead 1,500,000
Selling expenses 200,000
General and administrative expenses 400,000
Sales 8,000,000

a. Prepare a schedule of cost of goods manufactured.

b. Prepare an income statement for fiscal 2008. Ignore income taxes.
2-6. Job Costs Using Different Overhead Rates

Vintage Auto Company manufactures parts-to-order for antique cars. Vintage Auto makes
everything from fenders to engine blocks. Each customer order is treated as a job. They currently
have two jobs, No. 9823 and No. 9824, that are complete, although overhead has not
yet been applied. The company wants to know what each job's cost would be under alternative
overhead allocation rates based on: (1) direct labor cost, (2) direct labor
hours, and (3) machine hours. Estimates for this year are as follows:

Direct labor cost $240,000
Direct labor hours 20,000
Machine hours 6,000
Overhead costs $136,000

Depreciation on machinery accounts for 75 percent of the overhead costs. The job-cost
sheets show the following:
Job 9823 Job 9824
Direct material $855 $1,650
Direct labor cost $1,020 $1,020
Direct labor hours 85 68
Machine hours 100 200

a. Determine the overhead allocation rate under the three suggested allocation
bases. Round to two decimal places.

b. Calculate the cost of Job 9823 and Job 9824 using each of the three bases. Round to
two decimal places.

c. Discuss which allocation base appears preferable.

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Solution Summary

The solution explains four questions relating to Job Order Costing