Worksheet for job order costing system

1. Consider a single month’s activity for Rand Company, a producer of gold and silver medallions. Rand Company has two jobs in
process during April, the first month of its fiscal year. Job A, a special minting of 1,000 gold medallions was started during
March, 2006. By the end of March, $30,000 in manufacturing costs had been recorded on Job A’s cost sheet. Job B, an order for
10,000 silver medallions the fall of the Berlin Wall, was started in April.
a. Rand Company had $ 7,000 in raw materials on hand. During the month the company purchased on account additional $
60,000 in raw materials.
b. $52,000 in raw materials was requisitioned from the storeroom for use in production. These raw materials included $28,000
of direct materials for Job A, $22,000 of direct materials for Job B, and $2,000 of indirect materials
c. $60,000 recorded for direct labor and $15,000 for indirect labor. $ 40,000 of direct labor cost was charged to Job A and the
remaining balance was charged to Job B.
d. the company incurred the following general factory costs during April
Utilities (heat, water and power) $21,000
Rent on factory equipment 16,000
Miscellaneous factory overhead 3,000
e. Rand Company recognized $13,000 accrued properly taxes and that $ 7,000 in prepaid insurance expired on factory
buildings and equipment.
f. the company recognized that $18,000 in depreciation on factory equipment during April
g. During April 10,000 machine hours worked on Job A and 5,000 machine hours were worked on job B assume the
predetermined overhead rate is $6 per machine hour.
h. incurred $ 30,000 in selling and administrative salary costs during April
i. depreciation on office equipment during April was $ 7,000
j. advertising cost was $ 42,000 and other selling and administrative expense was $ 8,000
k. Job A was completed during April and the beginning balance of finished goods in previous month was $ 10,000.
l. 750 of the 1,000 gold medallions in Job A were shipped to customers by the end of the month for the total sales revenue of
$225,000.
2. Hogle Company is a manufacturer that uses job order costing system. On January 1, 2004 at the beginning of its fiscal year, the
company’s inventory balances were as follows;
Raw materials $10,000
Work in process 5,000
Finished goods inventory 30,000
The company applies the overhead costs to jobs on the basis of machine hour worked. For the year 2004, the company estimated
that it would work 75,000 machine hours and incurs $450,000 in manufacturing overhead cost. The following transactions were
recorded for the year;
a. raw material were purchased on account $ 410,000
b. raw material were requisitioned for use in production, $380,000 ($360,000 direct materials and $20,000 indirect materials)
c. the following cost were incurred for the employee services; direct labor $ 75,000; indirect labor $110,000; sales commission, $
90,000 and administrative salaries $ 200,000
d. sales travel cost $ 17,000
e. utility costs in the factory were $43,000
f. advertising costs were $ 180,000
g. depreciation was recorded for the year; $ 350,000 ( 80% related to the factory operations and 20% relates to selling and
administrative activities)
h. insurance expired during the year $ 10,000 ( 70% relates to the factory operation and 30% relates to selling and administrative
activities)
i. Manufacturing overhead was applied to production. due to the expected demand for its products the company worked 80,000
machine hours during the year
j. Goods costing $870,000 to manufacture according to their job cost sheet were completed during the year.
k. Goods were sold on account to customers during the year for the total of $1,500,000. The goods cost of $870,000 to manufacture
according to their job cost sheet.
Required;
1. prepare the journal entries to record the preceding transactions
2. post the entries in (1) above to T- account
3. Is manufacturing overhead over applied or under applied for the year? Prepare a journal entry to close any balances in the
manufacturing overhead account.
4. prepare the schedule of cost goods manufactured and cost of goods for the year 2004
5. prepare an income statement for the year 2004