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COST ACCOUNTING
JOB ORDER COSTING SYSTEM
CASE ANALYSIS
The Golden Bridge Construction Company builds bridges. For the year 2014,
the firm starts to work exclusively on a bridge spanning the raging river in
Laoag, North of Ilocos. The job was named by the firm as Bridges of Love
Project. The firm builds structural elements of the bridges in temporary
plants located near the construction sites and operates at the bridge site and
assembles the structural elements. Estimated costs for the Bridges of Love
Project were P3.5 billion for direct materials, P3 billion for direct labor and P3
billion for overhead. Overhead is applied on the last day of each month.
Overhead application rate is 100% of direct labor cost. The contract related
to the construction of the bridge has provided an agreement that the
completion of the said undertaking must be on the second year from the
start of the construction. Further, the contract has provided a fixed contract
price of P15 billion.
The project manager and project accountants office as well as the electronic
data processing system that was exclusively designed to facilitate the
recording of all the financial transactions related to the Bridges of Love
Project were housed in the basement of the office located in the construction
site. On May 16, 2014, typhoon PANIRA caused the Laoag River to overflow
and flooded the offices basement. Electronic data storage was beyond
retrieval, and they had not provided off-site storage of data. Some of the
paper printouts were located but were badly faded and only partially legible.
On May 17, when the river subsided, company accountants were able to
assemble the following related data from the debris and from discussions
with various knowledgeable personnel. Data about the following accounts
were found:
Each group should assume the task assigned to Ms. Pa B. Bay, CPA.
When I give you my TIME, Im giving you a portion of my life that I will never
get back. So please, dont make me regret it .
-Anonymous