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

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	$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	fill in the blank e3fb2504affffa6_1	fill in the blank e3fb2504affffa6_2	fill in the blank e3fb2504affffa6_3	fill in the blank e3fb2504affffa6_4
Total Cost	$fill in the blank e3fb2504affffa6_5	$fill in the blank e3fb2504affffa6_6	$fill in the blank e3fb2504affffa6_7	$fill in the blank e3fb2504affffa6_8
			Unit Cost	$fill in the blank e3fb2504affffa6_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 e3fb2504affffa6_10	fill in the blank e3fb2504affffa6_11	fill in the blank e3fb2504affffa6_12	fill in the blank e3fb2504affffa6_13
Dec. 31	fill in the blank e3fb2504affffa6_14	fill in the blank e3fb2504affffa6_15	fill in the blank e3fb2504affffa6_16	fill in the blank e3fb2504affffa6_17
Total Cost	$fill in the blank e3fb2504affffa6_18	$fill in the blank e3fb2504affffa6_19	$fill in the blank e3fb2504affffa6_20	$fill in the blank e3fb2504affffa6_21

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 e0e5c8feaf80fef_2	fill in the blank e0e5c8feaf80fef_3
	Materials	fill in the blank e0e5c8feaf80fef_5	fill in the blank e0e5c8feaf80fef_6

On December 15, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank.

Dec. 15	Work in Process	fill in the blank 5f4be301c002fde_2	fill in the blank 5f4be301c002fde_3
	Wages Payable	fill in the blank 5f4be301c002fde_5	fill in the blank 5f4be301c002fde_6

On December 15, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank.

Dec. 15	Work in Process	fill in the blank 5bc71b08000c054_2	fill in the blank 5bc71b08000c054_3
	Factory Overhead

On December 21, Job 62 is completed. Review the Job Cost Sheets and your journal entries. Journalize the entry to move the associated costs to the finished goods account. If an amount box does not require an entry, leave it blank.

Dec. 21	Finished Goods	fill in the blank 2295060bff82fcd_2	fill in the blank 2295060bff82fcd_3
	Work in Process

On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions:

a. The entry to record the sale.

b. The entry to record the transfer of costs from Finished Goods to Cost of Goods Sold.

If an amount box does not require an entry, leave it blank.

Dec. 22	Accounts Receivable	fill in the blank 71c28601f072036_2	fill in the blank 71c28601f072036_3
	Sales	fill in the blank 71c28601f072036_5	fill in the blank 71c28601f072036_6
Dec. 22	Cost of Goods Sold	fill in the blank 71c28601f072036_8	fill in the blank 71c28601f072036_9
	Finished Goods

On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31. If an amount box does not require an entry, leave it blank.

Dec. 31	Work in Process	fill in the blank 913511075059066_2	fill in the blank 913511075059066_3
	Wages Payable

On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31. If an amount box does not require an entry, leave it blank.

Dec. 31	Work in Process	fill in the blank 995fc6fe2fc0f95_2	fill in the blank 995fc6fe2fc0f95_3
	Factory Overhead

On December 31, journalize the following transactions. Note that expenses (b), (c), and (d) were paid in cash.

a. One months depreciation on equipment

b. One months payroll for all employees

c. One months rent of $1,000

d. One months factory utilities of $1,275

If an amount box does not require an entry, leave it blank.

Dec. 31	Factory Overhead	fill in the blank d26640fb204104f_2	fill in the blank d26640fb204104f_3
	Wages Expense	fill in the blank d26640fb204104f_5	fill in the blank d26640fb204104f_6
	Wages Payable	fill in the blank d26640fb204104f_8	fill in the blank d26640fb204104f_9
	Cash	fill in the blank d26640fb204104f_11	fill in the blank d26640fb204104f_12
	Accumulated Depreciation-Equipment

On December 31, prepare the journal entry to dispose of the balance in the factory overhead account. If an amount box does not require an entry, leave it blank.

Dec. 31	Cost of Goods Sold	fill in the blank fd5219049fe5f9d_2	fill in the blank fd5219049fe5f9d_3
	Factory Overhead

Final Question

What are the balances in the following accounts as of December 31? If an amount is zero, enter "0".

Materials	$fill in the blank 152b31fe7021fa6_1
Work in Process	$fill in the blank 152b31fe7021fa6_2
Finished Goods	$fill in the blank 152b31fe7021fa6_3
Factory Overhead	$fill in the blank 152b31fe7021fa6_4
Cost of Goods Sold