a) Distinguish between the two types of cost accounting systems. May a company use both types
of cost accounting systems
b) Watson Manufacturing Company employs a job order cost accounting system and keeps
perpetual inventory records. The following transactions occurred in the first month of
operations:
1. Direct materials requisitioned during the month:

Job 101 $20,000
Job 102 16,000
Job 103 24,000
$60,000

2. Direct labor incurred and charged to jobs during the month was:

Job 101 $32,000
Job 102 28,000
Job 103 20,000
$80,000

3. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate
based on 75% of direct labor costs.
4. Actual manufacturing overhead costs incurred during the month amounted to $66,000.

5. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during
the month.
Instructions
(a) Prepare journal entries to record the above transactions.
(b) Answer the following questions:
1. How much manufacturing overhead was applied to Job 103 during the month?
2. Compute the unit cost of Jobs 101 and 103.
3. What is the balance in Work In Process Inventory at the end of the month?
4. Determine if manufacturing overhead was under- or overapplied during the month. How
much?