JOB ORDER COSTING IN CLASS EXAMPLE

UNIT COST, SELLING PRICE, AND PREDETERMINED OVERHEAD RATE

Cost Assumptions:

Direct Material

Ink- 2 @ $10

Direct Labor- 3 hours per book @ $12

Manufacturing Overhead

Depreciation $160,000

Supplies- $56,000

Rent- $148,000

Utilities- $12,000

Taxes- $106,000

Insurance- $8,000

Supervisor- $110,000

Total Estimate Overhead- $600,000

Quantity to be produced- 50,000

Selling Price- 3 times the unit cost

JOB ORDER COSTING UNIT COST WORKSHEET TEAM 1

ESTIMATED UNIT COST
ACTUAL SELLING PRICE
PREDETERMINED OVERHEAD RATE (POR)

RECORD AND POST TO T-ACCOUNTS

STAGE 1-ACQUISITION. TEAM 2

Record and post the following transactions

FORM CORPORATION INVESTING $50,000

PURCHASED $800,000 IN EQUIPMENT ON NOTE

PURCHASED 110,000 INK CARTRIDGES @ $10

STAGE 2-PRODUCTION OR WORK IN PROCESS TEAM 3

Record and post the following transactions

TRANSFERRED 100,000 INK CARTRIDGES TO WIP

ACTUAL DIRECT LABOR HOURS WERE 152,000 (labor rate $10/hour)

APPLIED MANUFACTURING OVERHEAD AT PREDETERMINED LABOR RATE (Predetermined overhead rate times solid labor hours)152,000X4

STAGE 3-FINISHED GOODS TEAM 4

Completed 40,000 books

Record transfer of 40,000 units to finished foods with raw material transfer for 40,000 books only and 100% of labor and manufacturing overhead transferred to finished goods

Determine actual unit cost.

STAGE 4 -SALE OF FINISHED GOODS

Record sale of 30,000 books TEAM 5

Record actual manufacturing overhead and the entry for over or under-applied overhead if TEAM 6

Depreciation is $160,000

Other overhead expenses total $450,000