Part 4:

Overhead Cost Flow

Overhead Cost Flow
✓ Indirect materials
✓ Indirect labor
✓ Others
Overhead Cost Flow
Particular
Factory overhead
Debit
xx
Credit
✓ Indirect materials
Raw materials inventory xx

Particular Debit Credit

Factory overhead
Payroll
xx
xx ✓ Indirect labor

✓ Others
Particular Debit Credit
Factory overhead xx
Appropriate asset account xx

Particular Debit Credit

Factory overhead xx
Utilities payable xx

Particular Debit Credit

Factory overhead xx
Accumulated dep'n - Factory PPE xx
Overhead
Overhead

Predetermined
Overhead Rate
Overhead

JOB 1 JOB 2
Overhead
FACTORY
OVERHEAD

JOB 1 JOB 2
Overhead
FACTORY
OVERHEAD

JOB 1 JOB 2
Overhead
FACTORY
OVERHEAD

JOB 1 JOB 2
Overhead
FACTORY
OVERHEAD

JOB 1 JOB 2
 Factory Overhead

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
 Factory Overhead
Actual ₱6,000 Applied

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000

Assume that overhead is applied at 150% of direct labor.

 Factory Overhead
Actual ₱6,000 Applied

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000

₱4,000
Assume that overhead is applied at 150% of direct labor.
 Factory Overhead
Actual ₱6,000 Applied

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000

₱4,000 x 150% = 6,000

Assume that overhead is applied at 150% of direct labor.
 Factory Overhead
Actual ₱6,000 ₱6,000 Applied

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000

₱4,000 x 150% = 6,000

Assume that overhead is applied at 150% of direct labor.
 Factory Overhead
Actual ₱6,000 ₱6,000 Applied

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500

₱4,000 x 150% = 6,000

Assume that overhead is applied at 150% of direct labor.
 Factory Overhead
Actual ₱6,000 ₱6,000 Applied

₱0

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱6,000 ₱6,000 Applied

₱0

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱7,000 ₱6,000 Applied

I Overapplied Underapplied
Work in process – Job 1 Work in process – Job 2
material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱7,000 ₱6,000 Applied
1,000 underapplied
₱7,000 ₱7,000

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 6,000 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱7,000 ₱6,000 Applied
1,000 underapplied
₱7,000 ₱7,000

HOW MUCH?
Work in process – Job 1 Work in process – Job 2
material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱7,000 ₱6,000 Applied
1,000 underapplied
₱7,000 ₱7,000 COGS
Work in process – Job 1 Work in process – Job 2
material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱12,000 ₱6,000 Applied
6,000 underapplied
₱12,000 ₱12,000

Work in process – Job 1 Work in process – Job 2

material ₱2,500 material ₱5,000
labor 3,000 labor 1,000
Overhead 4,500 Overhead 1,500
Adjusting Factory Overhead
Factory Overhead
Actual ₱12,000 ₱6,000 Applied
6,000 underapplied
₱12,000 ₱12,000 COGS

INCOME STATEMENT
Job Order Cost Accounting System

JOB ORDER COST SHEET

JOB No.: 1

Direct Materials 6 0 7-
Direct Labor 1 0 0 0-

Work in
Process
Inventory
Job Order Cost Accounting System

JOB ORDER COST SHEET

JOB No.: 1

Direct Materials 6 0 7-
Direct Labor 1 0 0 0-

Work in Finished
Process Goods
Inventory Inventory
Job Order Cost Accounting System

JOB ORDER COST SHEET

JOB No.: 1

Direct Materials 6 0 7-
Direct Labor 1 0 0 0-

Work in Finished Cost

Process Goods of Goods
Inventory Inventory Sold
Adjusting Factory Overhead
Factory Overhead
Actual ₱12,000 ₱6,000 Applied
6,000 underapplied
₱12,000 ₱12,000

Work in Cost
Finished of Goods
Process Goods
Inventory Sold
Inventory
Adjusting Factory Overhead
Factory Overhead
Actual ₱12,000 ₱6,000 Applied
6,000 underapplied
₱12,000 ₱12,000

10% 60% 30%

₱1,000 ₱6,000 ₱3,000
Work in Finished Cost
Process Goods of Goods
Inventory Inventory Sold
Adjusting Factory Overhead
Factory Overhead
Actual ₱12,000 ₱6,000 Applied
6,000 underapplied
₱12,000 ₱12,000

10% 60% 30%

₱600 ₱3,600 ₱1,800
₱1,000 ₱6,000 ₱3,000
Work in Finished Cost
Process Goods of Goods
Inventory Inventory Sold
Adjusting Factory Overhead
1. Closed directly to COGS
2. Allocated to
a. Work in process
b. Finished goods inventory
c. Cost of goods sold