Class Handout - Job Costing Session - 2and3-2
Class Handout - Job Costing Session - 2and3-2
2. Rexford company manufactures finger splints for kids who get tendonitis from playing video
games.
The firm had the following inventories at the beginning and end of the month January
January 1 January 31
Finished goods $162,500 $152,100
Work in Process $305,500 $326,300
Raw Material $174,200 $161,200
Rexford company applies manufacturing overhead at the rate of 70% of direct – labor cost. Any
overapplied or underapplied manufacturing overhead is accumulated until the end of the year.
Other data:
Direct material used $652,000
Total manufacturing costs charged to product during the year
(includes direct material, direct labor and manufacturing overheads
applied at a rate of 60% of direct labor cost 1,372,000
Required:
A. What was the cost of raw material purchased during the year?
B. What was the direct labor charged to production during the year?
C. What was the cost of goods manufactured during the year?
D. What was the cost of goods sold during the year?
4. The following data pertain to the Aquarius Hostel supply company for the year just ended
Required :
A. Compute the firm’s predetermined overhead rate for the year using each of the following
common cost drivers: (a) machine hours, (b) direct labor hours, (c) direct labor dollars.
B. Calculate the overapplied or underapplied overhead for the year using each of the cost
drivers listed above.
5. Overapplied or Underapplied overhead
The following information pertains to Paramus Metal works for the year just ended.
Budgeted direct-labor cost : 77,000 hours (Practical capacity) at $17 per hour
Actual direct-labor cost : 79,000 hours at $18 per hour
Budgeted manufacturing overhead : $993,300
Budgeted selling and administrative expenses : $ 417,000
Depreciation : $ 225,000
Property taxes : 19,000
Indirect labor : 79,000
Supervisory salaries : 210,000
Utilities : 58,000
Insurance : 32,000
Rental of Space : 295,000
Indirect material (see data below : 79,000
Indirect material:
Required:
A. Compute the firm’s predetermined overhead rate, which is based on direct-labor hours.
B. Calculate the overapplied or underapplied overhead for the year.
6. Contemporary Trends is an interior decorating firm in Munich. The following costs were incurred in
the firm’s contract to redecorate the mayor’s officers.
The Firm’s budget for the year included the following estimates:
Overhead is applied to contracts using a predetermined overhead rate calculated annually. The rate is
based on direct professional labor cost.
Required: Calculate the total cost of the firm’s contract to redecorate the mayor’s officers. (Remember
to express your answer in terms of euros.
7. South western Fashions, Inc, which uses a job-order costing system, had two jobs in process at the
start of the year: Job no. 101 ($168,000) and job no. 102 ($107,000). The following information is
available.
a. The company applies manufacturing overhead on the basis of machine hours (based on the
practical capacity). Budgeted overhead and machine activity for the year were anticipated to be
$1,680,000 and 32,000 hours respectively.
b. The company worked on four jobs during the first quarter. Direct material used, direct labor
incurred, and machine hours consumed were as follows
c. Manufacturing overhead during the first quarter included charges of deprecation ($68,000),
indirect labor ($120,000), indirect material used ($10,000), and other factory cost ($279,000)
d. South western Fashion completed job no. 101 and job no. 102. Job no 102 was sold on account,
producing a profit of $69,400 for the firm.
Required