CHAPTER 2

Job Order Costing

ANSWERS TO QUESTIONS

2. (a) The two principal types of cost accounting systems are: (1) job order cost system and
(2) process cost system. Under a job order cost system, costs are assigned to each job or
batch of goods; at all times each job or batch of goods can be separately identified. A job
order cost system measures costs for each completed job, rather than for set time periods.
Under a process cost system, product-related costs are accumulated by or assigned to
departments or processes for a set period of time. Job order costing lends itself to specific,
special-order manufacturing or servicing while process costing is better suited to similar, large-
volume products and continuous process manufacturing.
(b) A company can use both types of systems. For example, General Motors uses process costing
for standard model cars and job order costing for custom-made vehicles.

6. The three inventory control accounts and their subsidiary ledgers are:
Raw materials inventory—materials inventory records.
Work in process inventory—job cost sheets.
Finished goods inventory—finished goods records.

13. Disagree. Actual manufacturing overhead cannot be determined until the end of a period of time.
Consequently, there could be a significant delay in assigning overhead and in determining the
total cost of the completed job.

18. Under- or overapplied overhead is not closed to Income Summary. The balance in Manufacturing
Overhead is eliminated through an adjusting entry. Under- or overapplied overhead generally is
considered to be an adjustment of Cost of Goods Sold.

BRIEF EXERCISE 2-2

Jan. 31 Raw Materials Inventory....................................... 4,000

Accounts Payable.......................................... 4,000

31 Factory Labor........................................................ 6,000

Factory Wages Payable................................ 5,200
Employer Payroll Taxes Payable................. 800

31 Manufacturing Overhead...................................... 2,000

Utilities Payable............................................. 2,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 2-1
BRIEF EXERCISE 2-6

Overhead rate per direct labor cost is 180%, or ($900,000 ÷ $500,000).

Overhead rate per direct labor hour is $18, or ($900,000 ÷ 50,000).
Overhead rate per machine hour is $9, or ($900,000 ÷ 100,000).

BRIEF EXERCISE 2-8

Mar. 31 Finished Goods Inventory............................... 50,000

Work in Process Inventory...................... 50,000

31 Cash................................................................... 35,000
Sales Revenue.......................................... 35,000

31 Cost of Goods Sold.......................................... 20,000

Finished Goods Inventory....................... 20,000

BRIEF EXERCISE 2-10

Shimeca Company
Dec. 31 Cost of Goods Sold.......................................... 1,200
Manufacturing Overhead.......................... 1,200

Garcia Company
Dec. 31 Manufacturing Overhead................................. 900
Cost of Goods Sold.................................. 900

SOLUTIONS TO EXERCISES

EXERCISE 2-2

(a) May 31 Work in Process Inventory..................... 10,400

Manufacturing Overhead........................ 800
Raw Materials Inventory................. 11,200

31 Work in Process Inventory..................... 12,500

Manufacturing Overhead........................ 1,200

2-2 Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
 Factory Labor.................................. 13,700

31 Work in Process Inventory

($12,500 X 60%).................................... 7,500
Manufacturing Overhead................ 7,500

31 Finished Goods Inventory...................... 7,540

Work in Process Inventory............. 7,540
($2,000 + $2,500 + $1,900 + $1,140*)

*$1,900 X 60%

(b) Work in Process Inventory

May 1 Balance 3,500 May 31 7,540
31 10,400
31 12,500
31 7,500
May 31 Balance 26,360
EXERCISE 2-2 (Continued)

Job Cost Sheets

Job Beginning Work Direct Direct Manufacturing*
No. in Process Material Labor Overhead Total
430 $1,500 $3,500 $ 3,000 $1,800 $ 9,800
431 0 4,400 7,600 4,560 16,560
$1,500 $7,900 $10,600 $6,360 $26,360

*Direct labor X .60

EXERCISE 2-4

(a) + $50,000 + $42,500 = $145,650

(a) = $53,150

$145,650 + (b) = $201,500

(b) = $55,850

$201,500 – (c) = $192,300

(c) = $9,200
EXERCISE 2-4 (Continued)

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 2-3
[Note: The instructions indicate that manufacturing overhead is applied on the
basis of direct labor cost, and the rate is the same in all cases. From Case A,
a student should note the overhead rate to be 85%, or ($42,500 ÷ $50,000).]

(d) = .85 X $140,000

(d) = $119,000

$83,000 + $140,000 + $119,000 = (e)

(e) = $342,000

$342,000 + $15,500 = (f)

(f) = $357,500

$357,500 – $11,800 = (g)

(g) = $345,700

[Note: (h) and (i) are solved together.]

(i) = .85(h)
$63,150 + (h) + .85(h) = $213,000
1.85(h) = $149,850
(h) = $81,000
(i) = $68,850

(j) = $213,000 + $18,000

(j) = $231,000

$231,000 – (k) = $222,000

(k) = $9,000

EXERCISE 2-7

1. Raw Materials Inventory................................................. 46,300

Accounts Payable.................................................... 46,300

2. Work in Process Inventory............................................. 29,200

Manufacturing Overhead................................................ 6,800
Raw Materials Inventory......................................... 36,000

3. Factory Labor.................................................................. 55,900

Factory Wages Payable.......................................... 51,000

2-4 Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
 Employer Payroll Taxes Payable........................... 4,900

4. Work in Process Inventory............................................. 50,000

Manufacturing Overhead................................................ 5,900
Factory Labor........................................................... 55,900

EXERCISE 2-7 (Continued)

5. Manufacturing Overhead........................................ 80,500

Accounts Payable............................................ 80,500

6. Depreciation Expense............................................. 8,100

Accumulated Depreciation—Building........... 8,100

7. Work in Process Inventory ($50,000 X 150%)....... 75,000

Manufacturing Overhead................................ 75,000

8. Finished Goods Inventory...................................... 88,000

Work in Process Inventory............................. 88,000

9. Accounts Receivable.............................................. 103,000

Sales Revenue................................................. 103,000

Cost of Goods Sold................................................. 75,000

Finished Goods Inventory.............................. 75,000

EXERCISE 2-9

(a) MANTLE COMPANY

Cost of Goods Manufactured Schedule
For the Month Ended May 31, 2014

Work in process, May 1......................................... $ 14,700

Direct materials used............................................. $62,400
Direct labor............................................................. 50,000
Manufacturing overhead applied.......................... 40,000
Total manufacturing costs............................ 152,400
Total cost of work in process............................... 167,100
Less: Work in process, May 31............................ 17,900
Cost of goods manufactured................................ $149,200
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 2-5
EXERCISE 2-9 (Continued)

(b) MANTLE COMPANY

(Partial) Income Statement
For the Month Ended May 31, 2014

Sales revenue...................................................... $210,000

Cost of goods sold
Finished goods, May 1................................ $ 12,600
Cost of goods manufactured..................... 149,200
Cost of goods available for sale................ 161,800
Less: Finished goods, May 31.................. 9,500
Cost of goods sold.............................. 152,300
Gross profit......................................................... $ 57,700

(c) MANTLE COMPANY

(Partial) Balance sheet
May 31, 2014

Current assets:
Finished goods inventory.......................... $ 9,500
Work in process inventory......................... 17,900
Raw materials inventory............................. 7,100 $34,500

SOLUTIONS TO PROBLEMS
PROBLEM 2-2A

(a) Work in Process Inventory

1/1 Balance (1) 128,400 Completed work (5) (c) 386,200
Direct materials (2) 131,000
Direct labor (3) 139,000
Manufacturing overhead (4)
166,800
12/31 Balance 179,000

(1) Job 7640 $ 77,800 (3) Job 7640 $ 36,000

Job 7641 50,600 Job 7641 48,000
$128,400 Job 7642 55,000
$139,000

2-6 Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only)
 (2) Job 7640 $ 30,000 (4) Job 7640 $ 43,200
Job 7641 43,000 Job 7641 57,600
Job 7642 58,000 Job 7642 66,000
$131,000 $166,800

(5) (a) Job 7640

Beginning balance.................................................. $ 77,800
Direct materials...................................................... 30,000
Direct labor............................................................. 36,000
Manufacturing overhead........................................ 43,200
$187,000

(b) Job 7641

Beginning balance.................................................. $ 50,600
Direct materials...................................................... 43,000
Direct labor............................................................. 48,000
Manufacturing overhead........................................ 57,600
$199,200

(c) Total cost of completed work

Job 7640.................................................................. $187,000
Job 7641.................................................................. 199,200
$386,200
PROBLEM 2-2A (Continued)

Work in process balance.............................................. $179,000

Unfinished job No. 7642................................................ $179,000 (a)

(a) Current year’s cost

Direct materials................................. $ 58,000
Direct labor........................................ 55,000
Manufacturing overhead.................. 66,000
$179,000

(b) Actual overhead costs

Incurred on account............................................... $120,000
Indirect materials................................................... 14,000
Indirect labor.......................................................... 18,000
Depreciation........................................................... 8,000
$160,000

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 2-7
 Applied overhead costs
Job 7640.................................................................. $ 43,200
Job 7641.................................................................. 57,600
Job 7642.................................................................. 66,000
$166,800

Actual overhead............................................................. $160,000

Applied overhead........................................................... 166,800
Overapplied overhead................................................... $ 6,800

Manufacturing Overhead............................................... 6,800

Cost of Goods Sold................................................ 6,800

(c) Sales revenue (given)......................................... $530,000

Cost of goods sold
Add: Job 7638.................................................... $ 87,000
Job 7639.................................................... 92,000
Job 7641.................................................... 199,200
378,200
Less: Overapplied overhead............................ 6,800 371,400
Gross profit......................................................... $158,600
PROBLEM 2-3A

(a)
(i) Raw Materials Inventory............................................. 4,900
Accounts Payable............................................... 4,900

Factory Labor.............................................................. 4,400

Cash..................................................................... 4,400

Manufacturing Overhead........................................... 1,100

Accumulated Depreciation—Equipment........... 700
Accounts Payable............................................... 400

(ii) Work in Process Inventory........................................ 4,900

Manufacturing Overhead........................................... 1,500
Raw Materials Inventory..................................... 6,400

Work in Process Inventory........................................ 3,200

Manufacturing Overhead........................................... 1,200
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 Factory Labor...................................................... 4,400

Work in Process Inventory ($3,200 X 1.25)............... 4,000

Manufacturing Overhead.................................... 4,000

(iii) Finished Goods Inventory......................................... 13,840

Work in Process Inventory................................. 13,840

Direct Direct Manufacturing Total

Job Materials Labor Overhead* Costs
Gannon $1,700 $1,160 $1,450 $ 4,310
Rosenthal 1,300 900 1,125 3,325
Linton 2,200 1,780 2,225 6,205
$13,840

*125% X direct labor amount

Cash............................................................................. 18,900
Sales revenue...................................................... 18,900
Cost of Goods Sold.................................................... 13,840
Finished Goods Inventory.................................. 13,840
PROBLEM 2-3A (Continued)

(b) Work in Process Inventory

6/1 Balance 5,540 June Completed work 13,840
Direct materials 4,900
Direct labor 3,200
Overhead applied 4,000
6/30 Balance 3,800

(c) Work in Process Inventory......................................................... $3,800

Job: Koss (Direct materials $2,000 + Direct labor $800 +

Manufacturing overhead $1,000).................................. $3,800

(d) STELLAR INC.

Cost of Goods Manufactured Schedule
For the Month Ended June 30, 2014

Work in process, June 1........................................... $ 5,540

Direct materials used................................................ $4,900

Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 2-9
 Direct labor................................................................ 3,200
Manufacturing overhead applied............................. 4,000
Total manufacturing costs................................ 12,100
Total cost of work in process................................... 17,640
Less: Work in process, June 30.............................. 3,800
Cost of goods manufactured................................... $13,840
PROBLEM 2-5A

(a) $5,600 ($16,850 + $7,975 – $19,225).

(b) $36,000 [$9,750 + $15,000 + (75% X $15,000)]. (Given in other data).

(c) $14,950 ($16,850 – $1,900).

(d) $6,600 ($8,800 X 75%).

(e) $12,200 [Given in other data—$3,800 + $4,800 + (75% X $4,800)].

(f) $54,150 ($36,000 + $14,950 + $8,800 + $6,600 – $12,200).

(g) $5,000 (Given in other data).

(h) $54,150 (See (f) above).

(i) $55,150 ($5,000 + $54,150 – $4,000).

(j) $4,000 (Given in other data).

(k) $12,025 (Equal to factory labor incurred).

(l) $3,225 ($12,025 – $8,800).

(m) $6,600 ($6,370* + $230) or (Same as (d)).

*$1,900 + $3,225 + $1,245

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