Chapter 16 - Activity

JobCosting

Comfort Inc. is a customized furniture manufacturer that uses job order cost system. The company received an order for500 custom sofas on Sept 1. The customer paid $50,000 as a deposit on the order on Sept 2.The company started working on job no. 101 during September 2019. The job involves making of 500 customized sofas for Thompson Inc. at an agreed selling price of $200 per sofa.

Date Materials requisition # Cost description

2-Sep 400A 4 sq. ft.of wood per sofa @ $5.00 per sq ft

5-Sep 400B 2.5 sq. ft. of padded material per sofa @ $3.00 per sq ft

7-Sep 400C 3 sq. ft. of leather cover per sofa @ $7 per sq foot

Date Labor work number Cost description

5-Sep 10A 100 hours for shaping woods @ $20 per hour

7-Sep 10B 300 hours of assembling & finishing @ $30 per hour

Comfort Inc. estimates the total factory overhead (FOH) costs will be $360,000 for the year. The company allocates the factory overhead costs based on the estimated total direct labor hours for the year, which is expected to be 12,000 hours.

Required:

(Label the units correctly ex: $5/lb.Or $64/DLH)

(a) Using the Data provideds calculate

(1) The company's Predetermined Factory Overhead Rate (PFOR)

360,000/12,000= $30/DLH

(2) How much Factory Overhead (FO) is allocated to Job 101 ?

400 DLH * $30/DLH= $12,000

(b) Use the following Job Costs Sheet for Job 101 and calculate Total costs for completion of job 101 and cost per customized sofas produced in the that job.

Job Order Cost Sheet for Job no. 101

Customer: Thompson Inc

Job description: 500 1customized sofa

Direct Materials Costs Direct Labor Costs FOH costs

Date Mat. Req. # Total costs Date Labor work # Total hours worked Total labor costs

2-Sep 400A $10,000 5-Sep 10A 100 $2,000 12,000

5-Sep 400B 3,750 7-Sep 10B 300 $9,000

7-Sep 400C $10,500

Total cost of job 72

Direct Material costs: $24,250

Direct Labor costs: $11,000

Factory OH costs: $12,000 Unit cost per Sofa: 94.5

Total costs: 4725000%

(c) Job 101 is completed on Sept 15,and the Customer picks up the order on Sept 20.The Customer Pays the balance on the invoice on Sept 30.Prepare the journal entries for each of the following items to the General Journal provided below. Unless a date is provided use the Job Completion date for the entries.

(1) The transfer of Direct Materials from the Warehouse to the production dpartment Dates should match the requistions

(2) Allocation of Factory overhead to job no. 101.

(3) The completion of the job 101 and the transfer from production to the finished goods warehouse.

(5) Recognizing the sale (on account) of the job 101 to the customer for $200 per sofa, the deposit paid by the customer and the final invoice payment.(The company uses perpetual invenotry method so don't forget the cost of goods sold) What date does this sale get recorded?What about the deposit and the final payment?

The General Journal should be in Chronological order.

Thompson Company, Inc.

General Journal Page 1

Date Account DR CR