Case Study 1

The general ledger of Diamonds in the Rough Ltd, a manufacturing firm operating a job cost system, included the following balances at May 31:

$

Raw Materials Control 35,000

Labour Control 3,375 (Cr.)

Factory Overhead Applied 420 (Cr.)

Work in Process 16,150

Finished Goods 17,075

Particulars of jobs in process and the job completed were:

Job No. Material Labour Overhead Total

In process 323 $ 6,750 $ 3,000 $ 3,600 $ 13,350

324 1,700 500 600 2,800

Completed 322 6,350 4,875 5,850 17,075

During the month of June, the following transactions occurred:

$ $

Materials purchased on credit 24,700

Factory wages paid - Gross 29,000

- PAYG Tax 6,700 22,300

Factory rent paid 2,500

Invoices for sundry factory overhead items 2,000

Depreciation at 15% per annum is to be charged on factory plant valued at $160,000.

Material issued to the factory and labour charged for the month were:

Job No. Material Labour

323 $nil $1,175

324 5,600 4,400

325 12,000 9,250

326 4,500 1,000

Indirect 3,000 9,800

25,100 25,625

Factory overhead is applied using a rate of 120% of direct labour cost. Any over/under-applied overhead is transferred to cost of goods sold at June 30. At 30 June, Job No. 326 was incomplete. Job Nos 322, 323 and 324 had been completed and sold on credit, while Job No. 325 was still in the finished goods warehouse. The jobs sold had a total sales value of $81,744.

Task 1

Calculate the balance of the following accounts (a single ledger is used):

a. Raw Materials Control

b. Labour Control

c. Factory Overhead Control

d. Factory Overhead Applied

e. Work in Process

f. Finished Goods