You are to work in this assignment individually. Any suspicious activities or cheating will result in grade of zero in this assignment. Instructions: Answer the all questions: 1. Prepare Journal Entries from the following information relating to Job Costing. a) The material storeroom receives a shipment of direct and indirect materials that cost $ 12,000. b) Materials are sent to the stamping and assembly areas. The Cost of the direct materials is $ 1,500 and the cost of the indirect materials is $ 900. c) Wages totalling $ 2,000 are accrued; 80 % of these costs are direct labour and 20% are indirect labour. d) Overhead costs are allocated to work in process using an allocation rate of 150% of direct labour costs. e) Job No. 1205, with a total cost of $ 2,500 is completed. f) Job No. 1205 is shipped to the customer, who is billed for $ 5,000. Solution: Date A B C D E F
Accounts Raw Material Inventory Cash Work in Process inventory Overhead Cost Control Raw material inventory Work in Process Inventory ($2,000 80%) Overhead Cost Control Raw material inventory Work in Process Inventory ( $1,600 150% ) Overhead Cost Control Finished Goods inventory Work in process Inventory Accounts receivable Sales revenue Cost of goods sold Finished goods inventory
Q.2 Following are production data for a process costing system.
Beginning work in process, 30% complete 12,000 units Started
90,000 units
Ending work in process, 70% complete8,000 units
Costs: Beginning work in process: Direct Materials Conversion costs
$ 28,800 5,220
Materials used during the period 216,000
Conversion costs incurred during the period
139,200
a. Compute EUP for DM and CC if DM costs are incurred evenly
throughout production. b. Using the weighted average, prepare a process costing report. c. Write out the journal entries for the costs incurred and the work performed this period under the weighted average method. Solution: a. Compute EUP for DM and CC if DM costs are incurred evenly throughout production.
b. Using the weighted average, prepare a process costing report.
Calculate actual cost per equivalent unit Weighted average Direct materials Conversion costs Total cost per equivalent unit
Costs $ 244,800 $ 144,420
Equivalent units 99,600 99,600
Cost per equivalent unit
$ 2.4578 $ 1.4500 $ 3.9078
Process cost reports
Weighted average Units Costs Total units completed & transferred out Ending work in process: Materials Conversion Total cost of EWIP Total accounted for
c. Write out the journal entries for the costs incurred and the work performed this period under the weighted average method. Work in process inventory Raw material inventory
$216,000
Work in process inventory
A/P, Wages Payable, etc.
$139,200
Finished goods inventory
Work in process inventory
$367,336
$216,000 $139,200 $367,336
Q.3 (A) How is overhead cost allocated in job costing? Overhead costs are the indirect costs that cannot be traced to jobs, it must be allocated to jobs using an overhead allocation base ( Cost Driver ), the companies usually use an estimated overhead allocation rate
(B) Discuss the Treatment of Normal an Abnormal Spoilage under
Job Costing. Normal spoilage consists of defective units that arise as part of regular operations. If normal spoilage arises from the requirements of a specific job, the cost of the spoiled units is charged to this job, another case arise if the Normal spoilage occurs periodically as a regular part of all job in this case the cost of normal spoilage is charged to overhead and is allocated with other overhead costs to all jobs. In other hand the Abnormal spoilage is spoilage that is not part of everyday operations in this case the abnormal spoilage is recorded in a Loss
