Q.2 Target Manufacturing Co.[TMC], makes custom furniture. Orders are received

on the companys web-site and over the phone, and the finished goods are ship-

ped as soon as they are completed. Goods are sold at a 100% mark-up on total

production cost.

Manufacturing Overhead

The company uses a job-order costing system. ALL Overhead is charged to

individual jobs on the basis of direct labour hours[DLH].

According to the budget for the year, total overhead is estimated to be $760,000

and total direct labour for the year is expected to be 80,000 hours - $9.50 per DLH

The company does not maintain a finished goods inventory, as jobs are completed, they are shipped out. Material purchased $50,000 including direct and indirect material in one account

During the month of April it had the following activity:

Assigned raw material to jobs as follows:

Job # Requisition# Direct Material

#1245 AX-111 $2,332

# 1687 AX-113 2,115

# 1987 AX-115 5,450

Payroll records for the month indicated as follows:

Factory Direct Labour

Job # Employee # Hours Pay Rate

#1245 A-1115 25 $25.00

B-2111 15 25.00

#1687 D-3123 10 22.00

A-1115 30 22.00

#1987 D-3123 10 22.00

B-2111 30 22.00

Factory Indirect Labour:

Factory Supervision

Supervisor A #1245 10 30.00

#1687 10 30.00

#1987 10 30.00

Supervisor B #1687 15 30.00

#1987 15 30.00

The following jobs were completed and sent off to the showroom for shipping to customers:

# 1245, #1687

Required:

1. Complete the job cost record provided for any one of the finished jobs.

Make the journal entry necessary to record the sale of that job at twice what it cost to produce it. A Job Cost Record has been provided to assist you in determining the cost of the job. Please complete the Job Cost Record and submit it with your exam.

[ 10 marks]

JOB COST SHEET

Number Date Initiated :

Date Completed :

Department: Units Completed :

Direct Materials Direct Labour Overhead

Req # || Amount || Employee Time sheet | Hours | Amount || Hours | Rate |Amount

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COST SUMMARY JOB COMPLETION STATUS

Direct Materials Date Progress to date

Direct Labour Completed

Overhead

Total Cost

Unit Cost