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Learning Objectives
a.
b. b.
b.
b.
Materials
750 units of
No. 8 Maple
Wood
Materials
Estimated Total
Predetermined Factory Factory Overhead Costs
=
Overhead Rate Estimated Activity Base
Predetermined Factory Overhead Rate
Predetermined
Factory $50,000
=
Overhead Rate 10,000 direct labor hours
Predetermined
Factory = $5 per direct labor hour
Overhead Rate
APPLYING FACTORY
OVERHEAD
Applying Factory Overhead
(continued)
A CLOSER LOOK AT
JOB 72
December Job
72 (500 hours)
for a total cost
of $7,500
(continued)
A CLOSER LOOK
AT JOB 72
from
materials
from time
requisitions
500
tickets
hrs. x
$5
Applying Factory Overhead
Direct
Labor Work in Cost of goods
Process manufactured
Inventory
Factory
Overhead
Finished
Goods
Inventory
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Materials Ledger
No. 8 Wood—Maple
Credit Accounts
Dec. 1
(a)
6,000
10,500 Payable, $10,500
Glue
Dec. 1 200
a. Materials purchased
Dec. 1
Sandpaper
300
during December
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Glue
Dec. 1 200 60 Units of American Series Guitars, Job 72
Sandpaper
Dec. 1 300 b. Materials requisitioned to jobs
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Glue
Dec. 1 200 60 Units of American Series Guitars, Job 72
(b) Direct materials 11,000
Sandpaper
Dec. 1 300 b. Update job cost sheets
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Materials Ledger
No. 8 Wood—Maple
Credit Wages
Dec. 1
(a)
6,000
10,500
(b) 13,000
Payable, $11,000
Glue
Dec. 1 200
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Glue
Dec. 1 200 60 Units of American Series Guitars, Job 72
(b) Direct materials 11,000
(c) Direct labor 7,500
Sandpaper
Dec. 1 300
c. Update the job cost sheets
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Materials Ledger
No. 8 Wood—Maple
Dec. 1 6,000 (b) 13,000
(a) 10,500
Materials Ledger
No. 8 Wood—Maple
Dec. 1 6,000
(a) 10,500
(b) 13,000
Credit Utilities Payable, $900
Glue d. Factory overhead
Dec. 1 200
incurred in production
Sandpaper
(utility bill, $900)
Dec. 1 300
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
e. Factory overhead is
applied to jobs according
to the predetermined
overhead rate
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Materials Ledger
No. 8 Wood—Maple
Debit Cost of
Dec. 1
(a)
6,000 (b)
10,500
13,000
Goods Sold, $150
Glue
Dec. 1 200 (d) 200
Dec. 1
Sandpaper
300 (d) 300
g. Job 71 completed in December
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Finished Goods
Materials Ledger
Dec. 1 20,000
No. 8 Wood—Maple (g) 10,250
Dec. 1 6,000 (b) 13,000
(a) 10,500
Glue
Dec. 1 200 (d) 200 Finished Goods Ledger
Jazz Series Guitars
Dec. 1 20,000
Sandpaper (g) 10,250
Dec. 1 300 (d) 300
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Finished Goods
Dec. 1 20,000 h. Sold 40 units of Jazz
(g) 10,250
Series guitars on account
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
Finished Goods
Dec. 1 20,000 (i) 20,000
(g) 10,250
i. Cost of 40 units of Jazz
Series guitars sold
Finished Goods Ledger
Jazz Series Guitars
Dec. 1 20,000 (i) 20,000
(g) 10,250
(continued)
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
SUMMARY OF COST
FLOWS FOR
LEGEND GUITARS
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Job Order Costing for Decision Making