JOB ORDER COSTING

Job #1 Job #2 Job #3

Beg. xx xx xx
DM xx xx xx
DL xx xx xx
OH xx xx xx = xx  Applied OH

1. Compute first the pre-determined rate:

Budgeted cost
Pre−determined rate=
Budgeted hrs

2. Use the table above,

Applied Overhead=Factory labor hours x Pre−determined rate

3. Label every job whether its CGM, COS, WIP

4. Compute the Actual Overhead cost to get the Under- or Overapplied overhead

Actual Overhead xx
Less: Applied Overhead (xx)
Under or Overapplied xx

Journal Entries:

Raw Materials:
1. Raw Materials Inventory xx
Accounts Payable xx
2. WIP xx
Raw Materials Invtry xx

Work in Process:
1. Salaries Expenses xx
Salaries Payable xx
2. WIP xx
Salaries Expenses xx

Actual Overhead Cost:

1. Dep’n Expense xx
Utilities Expense xx
Rent Expense xx
Accum. Dep’n xx
Utilities Payable xx
Rent Payable xx
 JOB ORDER COSTING

2. OH-Control (Temporary Account) xx

Dep’n Expense xx
Utilities Expense xx
Rent Expense xx

Standard/Normal Overhead Cost:

1. WIP xx
OH-Applied (Predetermined OH rate) xx

Closing:
1. OH-Applied xx
OH-Control xx
Immaterial – Cost of Goods sold xx
Difference
Material
 WIP
 FG
 COGS
Allocation of Under or Overapplied:
1. Get the rate: WIP x%
FG x%
COS x%

2. multiply the rate from the under or under

1. Computation unit cost:

WIP
Unit cost =
Total Units

2. Cost of Goods Manufactured:

Direct Material USED xx
Add: Direct Labor xx
Overhead xx
Total Manufacturing Cost xx
Add: WIP, Beg. xx
Less: WIP, end. (xx)
Cost of Goods Manufactured xx
Add: FG, Beg. xx
Less: FG, end (xx)
Cost of Goods Sold xx
 JOB ORDER COSTING

Raw Material Work in Process

Beg. RM Beg. WIP
Purchases DM used TMC CGM

End. RM End. WIP

Finish Goods
Beg. FG
CGM COGS

End. FG

DM used
TMC DL
OH

Note: Normal = Standard

If silent as to Actual or normal, assume @ Normal/Standard

OH is based on the direct labor cost:

OH
Applied OH rate=
DL

Budgeted cost
Pre−determined rate=
Budgeted hrs

SCRAP
- Other income
- Increase in the net income
- Inventory
o Scrap Inventory xx
WIP xx

Spoilage
1. Proceeds – interest buyer, secondhand
2. Unrecovered cost
a. Buyer’s fault – charge to buyer
b. Seller’s fault – charge to FOH control

Rework
A. Buyers fault – part of cost
B. Sellers fault – FOH control
JOB ORDER COSTING