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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

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 knitter's time, the rest of the knitter's 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 $30,000
Estimated office utilities $3,000
Estimated factory utilities $4,800
Estimated factory rent $12,000

Activity Base Data
Estimated number of DLH for the year 6,250
Estimated number of MH for the year 4,375

Compute the predetermined factory overhead rate for the current year.

$5.28 per DLH $7.54 per DLH $7.68 per DLH $8.16 per DLH Another amount per DLH

Materials Requisition Date: Dec. 10
Req. No. 12255 Job No. 83
Description Qty. Issued Unit Price Amount
Yarn type B 700skeins $5 $3,500
Totalissued $3,500

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 $20 $1,300
12/16-12/31 83 103 20 2,060
Total Cost $3,360

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 $20 $1,500
12/16-12/31 83 88 20 1,760
Total Cost $3,260

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 $20 $1,200
12/16-12/31 83 109 20 2,180
Total Cost $3,380

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

Total Cost
Unit Cost

Job 83 200 units: Sweater vests
Direct Materials Direct Labor Factory Overhead Total Job Cost
Balance Dec. 1 $0 $0 $0 $0
Dec. 10

Dec. 31

Total Cost

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