Ch. 16 Lab Activity

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   Mastery Problem: Job Order Costing

   Purl of Great Price Company

   Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.

   Each knitter has a knitting machine that is used about 2/3 of the knitters time, the rest of the knitters time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.

   The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.

   Nov. 30 Trial Balance

   POGP Company Trial Balance November 30, 20Y8
   Account Title	Debit	Credit
   Cash	20,000
   Accounts Receivable	1,000
   Supplies	200
   Materials	5,000
   Work in Process	5,404
   Equipment	12,000
   Accumulated Depreciation-Equipment		825
   Accounts Payable		150
   Common Stock		10,000
   Retained Earnings		12,000
   Dividends	18,096
   Sales		307,500
   Cost of Goods Sold	255,040
   Factory Overhead		15
   Wages Expense	13,750
   	330,490	330,490

   Predetermined Factory Overhead Rate

   Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).

   Estimated Selected Amounts for the Year
   Estimated depreciation on equipment	$1,200
   Estimated total Office Manager/Knitting Supervisor wages	$36,000
   Estimated office utilities	$4,000
   Estimated factory utilities	$4,800
   Estimated factory rent	$12,000

   Activity Base Data
   Estimated number of DLH for the year	5,000
   Estimated number of MH for the year	3,500

   Compute the predetermined factory overhead rate for the current year.

   Feedback

   Review the definitions of items that are included in factory overhead for the computation of estimated total factory overhead costs.

   Materials Requisition			Date: Dec. 10
   Req. No. 12255	Job No. 83
   Description	Qty. Issued	Unit Price	Amount
   Yarn type B	600 skeins	$5	$3,000
   		Total issued	$3,000

   Time Ticket	No. 1255	Name:	Susan Blake
   Work Description:	Knitting/piecing
   Dates	Job No.	Hours Worked	Unit Price	Amount
   12/01-12/15	62	65	$15	$975
   12/16-12/31	83	103	15	1,545
   			Total Cost	$2,520

   Time Ticket	No. 2274	Name:	Josh Porter
   Work Description:	Knitting/piecing
   Dates	Job No.	Hours Worked	Unit Price	Amount
   12/01-12/15	62	75	$15	$1,125
   12/16-12/31	83	88	15	1,320
   			Total Cost	$2,445

   Time Ticket	No. 3923	Name:	Mary Jones
   Work Description:	Knitting/piecing
   Dates	Job No.	Hours Worked	Unit Price	Amount
   12/01-12/15	62	60	$15	$900
   12/16-12/31	83	109	15	1,635
   			Total Cost	$2,535

   Job Cost Sheets

   On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition table to add the materials to the Job Cost Sheet for Job 83.

   On December 15, review the Time Ticket tables to add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 62 for the period December 1 through December 15.

   On December 31, the last work day of the year for the knitters, review Time Ticket tables to add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 83 for the period December 16 through December 31.

   If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.

   Job 62	100 units:	Sweaters
   	Direct Materials	Direct Labor	Factory Overhead	Total
   Balance Dec. 1	$5,000	$300	$104	$5,404
   Dec. 15	fill in the blank 1c3d06f6efa4fba_1	fill in the blank 1c3d06f6efa4fba_2	fill in the blank 1c3d06f6efa4fba_3	fill in the blank 1c3d06f6efa4fba_4
   Total Cost	$fill in the blank 1c3d06f6efa4fba_5	$fill in the blank 1c3d06f6efa4fba_6	$fill in the blank 1c3d06f6efa4fba_7	$fill in the blank 1c3d06f6efa4fba_8
   			Unit Cost	$fill in the blank 1c3d06f6efa4fba_9

   Job 83	200 units:	Sweater vests
   	Direct Materials	Direct Labor	Factory Overhead	Total Job Cost
   Balance Dec. 1	$0	$0	$0	$0
   Dec. 10	fill in the blank 1c3d06f6efa4fba_10	fill in the blank 1c3d06f6efa4fba_11	fill in the blank 1c3d06f6efa4fba_12	fill in the blank 1c3d06f6efa4fba_13
   Dec. 31	fill in the blank 1c3d06f6efa4fba_14	fill in the blank 1c3d06f6efa4fba_15	fill in the blank 1c3d06f6efa4fba_16	fill in the blank 1c3d06f6efa4fba_17
   Total Cost	$fill in the blank 1c3d06f6efa4fba_18	$fill in the blank 1c3d06f6efa4fba_19	$fill in the blank 1c3d06f6efa4fba_20	$fill in the blank 1c3d06f6efa4fba_21

   Feedback

   Recall that the factory overhead is applied for this company using direct labor hours (DLH).

   Journal

   On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition table to journalize the entry to record the addition of the materials to Work in Process. If an amount box does not require an entry, leave it blank.

   Dec. 10	Work in Process	fill in the blank 1acaecf7303dff4_2	fill in the blank 1acaecf7303dff4_3
   	Materials	fill in the blank 1acaecf7303dff4_5	fill in the blank 1acaecf7303dff4_6