Name: Date: September 2017

Cost Accounting Tutorial

3rd Meeting – Job Costing (Chapter 4)
Teaching Assistant Team

Problem 1
a. Define cost pool and cost-allocation base! 

b. How does a job-costing system differ from a process-costing system?
c. Describe the seven steps in job-costing system!
d. Distinguish between actual costing and normal costing!

Problem 2
Falcon’s Construction assembles residential houses. It uses a job-costing system with two
direct-cost categories (direct materials and direct labor) and one indirect-cost pool
(assembly support). Direct labor-hours is the allocation base for assembly support costs. In
December 2010, Falcon budgets 2011 assembly-support costs to be $8,300,000 and 2011
direct labor-hours to be 166,000.
At the end of 2011, Falcon is comparing the costs of several jobs that were started and
completed in 2011.

Laguna Model Mission Model

Construction period Feb-June 2011 May-Oct 2011
Direct material costs $ 106.760 $ 127.550
Direct labor costs $ 36.950 $ 41.320
Direct labor-hours 960 1.050

Direct materials and direct labor are paid for on a contract basis. The costs of each are
known when direct materials are used or when direct labor-hours are worked. The 2011
actual assembly-support costs were $6,520,000, and the actual direct labor-hours were
163,000.

Required:
1. Compute the (a) budgeted indirect-cost rate and (b) actual indirect-cost rate. Why do
they differ? 

2. What are the job costs of the Laguna Model and the Mission Model using (a) normal
costing and (b) actual costing?
3. Compute the over/under allocated of overhead for each model and prepare the journal
entries to dispose the overhead variances to COGS.
Problem 3
Cedarwood, Inc. is a furniture company which specializes in manufacturing all types of
furniture from cedarwood. The company produces furniture based on specifications from
customers, and order from one customer is different from another customer. Based on this
situation, the company uses job order costing to accumulate its production costs. Company
Work-in-Process Inventories at November 1st 2011 were as follows:

Factory Overhead
Job Cost Sheet No. Direct Material Direct Labor
Allocated (Applied)
Job – 23 Rp50,000,000 Rp5,000,000 Rp10,000,000
Job – 26 Rp40,000,000 Rp8,000,000 Rp16,000,000

Company’s Finished Goods Inventories at November 1st 2011 were as follows:

Factory Overhead
Job Cost Sheet No. Direct Material Direct Labor
Allocated (Applied)
Job – 21 Rp80,000,000 Rp10,000,000 Rp20,000,000
Job – 24 Rp30,000,000 Rp8,000,000 Rp16,000,000
Job – 25 Rp50,000,000 Rp15,000,000 Rp30,000,000
Job – 28 Rp70,000,000 Rp23,000,000 Rp46,000,000

Transactions that the company made during November 2011 were as follows:
1. Purchased Rp200,000,000 of raw materials, 60% of them were paid in cash, while
the rest will be paid next month.
2. Issued raw materials from the warehouse as follows:
Materials
Amount Job Cost Sheet No.
Recquisition Form
MR-Nov-01 Rp40,000,000 Job – 26
MR-Nov-02 Rp30,000,000 Job – 30
MR-Nov-03 Rp45,000,000 Job – 31
MR-Nov-04 Rp60,000,000 Job – 32
MR-Nov-05 Rp20,000,000 Job – 30
MR-Nov-06 Rp75,000,000 Job – 33
MR-Nov-07 Rp25,000,000 -
3. Paid salary Rp200,000,000, which consisted of Rp110,000,000 for Factory Labors,
Rp40,000,000 for Marketing Personnel, and Rp50,000,000 for Administrative
Personnel.
4. Salary for Factory Labors consisted of:
Amount Job Cost Sheet No.
Rp8,000,000 Job – 23
Rp10,000,000 Job – 26
Rp20,000,000 Job – 30
Rp18,000,000 Job – 31
Rp58,000,000 -
Rp15,000,000 Job – 32
Rp22,000,000 Job – 33
 5. Paid electricity expenses Rp60,000,000. It consisted of Rp40,000,000 for operating
the machine for making furniture, Rp5,000,000 for factory administration,
Rp5,000,000 for marketing office, and Rp10,000,000 for administrative office.
6. Paid rent for marketing office for one year, Rp12,000,000. Rent will officially begin
next month.
7. Paid machine maintenance expenses for November 2011 Rp20,000,000.
8. Put an advertisement in local magazines (November issues) and paid Rp3,000,000.
9. Buy a new machine Rp50,000,000. The company already paid Rp20,000,000 and the
rest will be paid next month. Machine is already delivered to the company.
10. Depreciation expenses (including new machine) for November 2011 were
Rp30,000,000 for factory machine, Rp10,000,000 for factory building, and
Rp15,000,000 for administrative building.
11. Factory Overhead will be allocated to each Job based on direct labor costs and the
FOH rate is 200% of Direct Labor Costs.
12. Job 23, 26, 30, and 31 are already finished and transferred to Finished Goods
Inventory.
13. Closed the over/underapplied FOH to Cost of Goods Sold.
14. Job which are sold during November 2011 (all of the sales were credit sales) were:
Job No. Sales Price
Job – 21 Rp180,000,000
Job – 23 Rp115,000,000
Job – 24 Rp75,000,000
Job – 25 Rp125,000,000
Job – 30 Rp155,000,000

Required:
1. Based on informations provided, prepare the necessary journals for Cedarwood, Inc.
2. Calculate the amount of Ending WIP Inventory, F/G Inventory, and the actual COGS
for Cedarwood, Inc.
3. Prepare Cedarwood’s Income Statement for November 2011.
Homework
Production Company produces gadgets for the coveted small appliance market. The
following data reflect activity for the year 2014:

Costs incurred:
Purchases of direct materials (net) on credit 124,000
Direct manufacturing labor cost 80,000
Indirect labor 54,500
Depreciation, factory equipment 30,000
Depreciation, office equipment 7,000
Maintenance, factory equipment 20,000
Miscellaneous factory overhead 9,500
Rent, factory building 70,000
Advertising expense 90,000
Sales commissions 30,000

Inventories:
1-Jan-14 31-Dec-14
Direct materials 9,000 11,000
Work in process 6,000 21,000
Finished goods 69,000 24,000

Production Co. uses a normal costing system and allocates overhead to work in process at a
rate of $2.50 per direct manufacturing labor dollar. Indirect materials are insignificant so
there is no inventory account for indirect materials.
1. Prepare journal entries to record the transactions for 2014 including an entry to
close out over- or underallocated overhead to cost of goods sold.
2. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold,
the Manufacturing Overhead Control Account, and the Manufacturing Overhead
Allocated Account.