Page 756 - Accounting Principles (A Business Perspective)

18. Managerial accounting concepts/job costing

Finished goods (Job No. 21) 140,000
The work in process inventory consisted of two jobs:
Job No. Direct Direct Manufacturing Total
materials labor overhead
22 $36,000 $40,000 $20,000 $ 96,000
23 40,000 28,000 16,000 84,000
$76,000 $68,000 $180,000
Cost and sales data for 2010:
Materials purchased on account, USD 400,000.
Direct materials used: Job No. 22, USD 60,000; Job No. 23, USD 120,000; Job No. 24, USD 180,000.

Indirect materials used, USD 10,000.
Direct labor costs: Job No. 22, USD 100,000; Job No. 23, USD 200,000; and Job No. 24, USD 80,000.
Indirect labor costs, USD 80,000.
Overhead is assigned to jobs at USD 100 per machine-hour. Job No. 22 used 500 machine-hours, Job No. 23
used 1,000 machine-hours, and Job No. 24 used 300 machine-hours in January.
Job No. 22 and 23 were completed and transferred to Finished Goods Inventory.
Job No. 21 and 22 were sold on account for USD 1,200,000, total.
Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation,
USD 80,000, and heat, light, power, miscellaneous, USD 40,000.

a. Prepare journal entries to assign the preceding costs to jobs. Show the appropriate entries debiting Finished
Goods Inventory and Cost of Goods Sold. Transfer overapplied or underapplied overhead to Cost of Goods Sold.
b. Assuming selling and administrative expenses were USD 100,000, prepare an income statement for 2010.
Problem E Green Thumb Landscaping Company uses a job cost system. As of 2010 January 1, its records
showed the following inventory balances:
Materials (shrubs, trees, $ 13,500
etc.)
Work in process 25,800
Finished goods (Job No. 30,000
211)
The work in process inventory consisted of two jobs:
Job No. Direct Direct Manufacturing Total
MaterialsLabor Overhead
212 10 Downing St. $4,500 $ 6,000 $2,400 $12,900
213 1010 Wilshire Blvd. 5,100 4,800 3,000 12,900
$9,600 $10,800 $5,400 $25,800
Here are data for the company for January:
Materials purchased, USD 48,000.
Landscaping direct labor costs: direct labor to Job No. 212, USD 12,000; to Job No. 213, USD 24,000; and to
Job No. 214, USD 36,000. Indirect labor, USD 30,000.
Direct materials used: direct materials for Job No. 212, USD 7,800; for Job No. 213, USD 14,400; and for Job
No. 214, USD 24,000. Supplies (indirect materials) used amounted to USD 1,200.

Overhead is assigned to jobs at USD 3 per labor-hour, with 8,000 labor-hours to Job 212 and 2,000 labor-hours
each to Jobs 213 and 214.
Jobs 212 and 213 were completed and in Finished Goods Inventory at the end of January.

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