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Assignment #1

Job Order Costing

ONLY SUBMIT

THE PAGES (single-sided) TH

AT START WITH "NAME"

(pp. 4

6)

Question [Chapter

3] (16 marks)

Analysis of Cost Flows and Inventories under Job-Order Costing

Quickmix Ltd. manufactures electric mixers and

chopping tools. A job-

order costing system is

used, since the products are manuf

actured in batches rather t

han on a continuous basis. The

company started operations on

January 2, 2012. Operating activities during the first 11

months of the year (through No

vember 30) resulted in the fo

llowing balances in selected

accounts:

Raw Materials#

Manufacturing Overhead

Bal. 36,000

2,260,000

*

?

Bal. ?

Work-in-Process

Cost of Goods Sold

Bal. 1,200,000

Bal. 14,200,000

Finished Goods

Bal. 2,785,000

#

The raw materials account includes (both) di

rect materials and indirect materials.

*

This figure represents the debits to the manuf

acturing overhead account for the first eleven

months of the year.

The following additional information is available on the company:

a. The work-in-process inventory at

November 30 consisted of two jobs:

Total Cost

as of

Job No. Units Item November 30

5011 ............ 48,000 Professi

onal mixers $700,000

6011 ............ 39,000 Base mixe

rs 500,000

$1,200,000

b. The finished goods inventory at November 30

consisted of five separate items in stock:

Items Quantity and Unit Cost

Total Cost

Professional mixers ........ 5,000 units at $22 each $110,000

Premium mixers .............

115,000 units at $17 each 1,955,000

Brass choppers ..............

10,000 units at $14 each 140,000

Steel choppers

............... 5,000 units at

$16 each 80,000

Mixer utensil set .............

100,000 units at $5 each

500,000

$2,785,000

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c. Manufacturing overhead is applie

d to jobs on a basis of di

rect labour-hours. For 2012,

management estimated that the company wo

uld work 450,000 direct labour-hours and

incur $3,150,000 in manufac

turing overhead costs.

d. A total of 367,000 direct labour-hours were

worked during the first 11 months of the year.

Items (e) through (j) below summari

ze the activity that took pl

ace in the company during the

month of December 2012.

e. A total of $708,000 in raw materi

als was purchased during the month.

f. Raw materials were requisitioned as follows:

Job No. Quantity and Items

Materials

5011 ............................... S

ee above $210,000

6011 ............................... S

ee above 6,000

1021 ............................... 30,

000 Steel choppers 181,000

2021 ............................... 10,

000 Premium mixers 92,000

3021 ............................... 50,

000 Costco mixers 163,000

- ................................. Indirect ma

terials 20,000

$672,000

g. The payroll during December was as follows:

Job No. Hours Total Cost

5011 .............................................. 6,

000 $62,000

6011 .............................................. 2,

500 26,000

1021 ............................................

18,000 182,000

2021 ................................................. 500

5,000

3021 .............................................. 5,

000 52,000

Indirect l

abour ............................... 8,

000 84,000

Sales and administrat

ion ................ -

120,000

$531,000

h. Other costs incurred in the

factory during December were:

Amortizati

on .................................

$62,500

Utilities

............................................15,000

Insuranc

e..........................................1,000

Property ta

xes ..................................3,500

Maintenance.................................

5,000

$87,000

i. Jobs completed during December and the units transferred to the finished goods

warehouse were as follows:

Job No. Quantity Items

5011 .............................. 48,

000 units Professional mixer

6011 ............................

39,000 units Base mixers

1021 ................................30,

000 units Steel choppers

3021 .............................. 50,

000 units Costco mixers

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j. Finished products were shipped to cu

stomers during Dece

mber as follows:

Items Quantity

Professional mi

xers ........................................16,

000 units

Premium mixers

.............................................32,000

units

Base mixers

...................................................20,

000 units

Costco mixers

................................................22,000

units

Brass choppers

................................................5,000

units

Steel choppers

...............................................10,000

units

Mixer utensil se

t .............................................26,000

units

Required:

1. Determine the amount of under/over-applied

manufacturing overhead for the year 2012 and

indicate whether it is

underapplied or

overapplied.

2. (i) What is the appropriate accountin

g treatment for under-or overapplied

overhead in general- i.e., not for this specific case.

(ii) For this specific case, discuss what t

he appropriate accounting tr

eatment should be and

why? Actual journal

entry not required.

3. Determine the dollar balance in the work-in-pr

ocess inventory account as of December 31,

2012. Show all computations. [I

gnore any under/over-applied overhead.]

4. For the Professional mixers only, determi

ne the dollar balance in the finished goods

inventory account as of December 31, 2012.

Assume a FIFO flow

of units- i.e., the

professionals mixers produced the

earliest are sold first. Show

all computations. [Ignore

any under/over-applied overhead.]

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294 - ASSIGNMENT #1 NAME (L

ast, First):__________

___________________

Student No.:______________________

Question [16 marks]

1. Determine the amount of under/over-applied

manufacturing overhead for the year 2012 and

indicate whether it is

underapplied or

overapplied.

2. (i) What is the appropriate accountin

g treatment for under/over-applied overhead in

general- i.e., not for this specific case.