Assignment #$1$ Job Order Costing

Question $[$Chapters $2$ and $5](20$ marks$)$

Analysis of Cost Flows and Inventories under Job$-$Order Costing

Fastmix Inc. manufactures electric mixers and chopping tools. A job$-$order costing system is used, since the products are manufactured in batches rather than on a continuous basis. The company started operations on October $1,2023.$ Operating activities during the first $11$ months of the fiscal year $($through August $31,2024)$ resulted in the following balances in selected accounts:

Raw Materials#

Manufacturing Overhead

Balance $36,0002,260,000*$

$?$

Balance $?$

Work$-$in$-$Process

Cost of Goods Sold

Balance $1,200,000$

Balance $14,200,000$

Finished Goods

Balance $2,797,210$

# The raw materials account includes $($both$)$ direct materials and indirect materials.

$*$ This figure represents the debits to the manufacturing 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 August $31$ consisted of two jobs:

Total Cost as of

Job No$.$ Units Item August $31$

$601148,000$ Professional mixers $$700,000$

$701139,000$ Base mixers $500,000$

$$1,200,000$

b$.$ The finished goods inventory at August $31$ consisted of five separate items in stock: Items Quantity and Unit Cost Total Cost

Professional mixers $5,555$ units at $$22$ each $$122,210$

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 $500,000$

$$2,797,210$

c$.$ Manufacturing overhead is applied to jobs on a basis of direct labour$-$hours. For the fiscal year $2024,$ management estimated that the company would work $450,000$ direct labour$-$hours and incur $$3,150,000$ in manufacturing 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 summarize the activity that took place in the company during the month of September $2024.$

e$.$ A total of $$708,000$ in raw materials was purchased during the month.

f$.$ Raw materials were requisitioned as follows:

Job No$.$ Quantity and Items Materials

$6011...............................$ Professional mixers $$210,000$

$7011...............................$ Base mixers $6,000$

$2021...............................30,000$ Steel choppers $181,000$

$3021...............................10,000$ Premium mixers $92,000$

$4021...............................50,000$ Costco mixers $163,000$

$.................................$ Indirect materials $20,000$

$$672,000$

g$.$ The payroll during September was as follows:

Job No$.$ Hours Total Cost

$6011..............................................6,000$ $$62,000$

$7011..............................................2,50026,000$

$2021............................................18,000182,000$

$3021.................................................5005,000$

$4021..............................................5,00052,000$

Indirect labour $...............................8,00084,000$

Sales and administration $................120,000$

$$531,000$

h$.$ Other costs incurred in the factory during September were:

Depreciation $$62,500$

Utilities $15,000$

Insurance $1,000$

Property taxes $3,500$

Maintenance $5,000$

$$87,000$

i$.$ Jobs completed during September and the units transferred to the finished goods warehouse were as follows:

Job No$.$ Quantity Items

$6011..............................48,000$ units Professional mixers

$7011............................39,000$ units Base mixers

$2021..............................30,000$ units Steel choppers

$4021..............................50,000$ units Costco mixers

j$.$ Finished products were shipped to customers during September as follows: Items Quantity

Professional mixers $16,000$ 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 set $26,000$ units

Required:

$1.$ Determine the amount of under$/$over$-$applied manufacturing overhead for the fiscal year $2024$ and indicate whether it is under$-$applied or over$-$applied. $(6$ marks$)$

$2.($i$)$ In general, what is the appropriate accounting treatment $($for management accounting purposes, not IFRS$)$ for under$/$over$-$applied overhead $($at September $30,2024).(2$ marks$)$

$($ii$)$ For Fastmix, discuss the appropriate accounting treatment $($for management accounting purposes, not IFRS$)$ for under$/$over$-$applied overhead $($at September $30,2024)?(2$ marks$)$

$3.$ Determine the dollar balance in the work$-$in$-$process inventory account as of September $30,2024.$ Show all computations. $[$Ignore any under$/$over$-$applied overhead.$](5$ marks$)$

$4.$ For the Professional mixers, determine the dollar balance in the finished goods inventory account as of September $30,2024.$ Assume a FIFO $($first$-$in$-$first$-$out$)$ flow of units. Show all computations. $[$Ignore any under$/$over$-$applied overh