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# Exercise 1 - Exercise 1-Cost accumulation procedure...

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Exercise 1--Cost accumulation procedure determination: Classify these industries with respect to the type of cost accumulation procedure generally used-- job order costing or process costing. a. Meat k. Pianos b. Sugar l. Linoleum c. Steel m. Leather d. Breakfast cereal n. Nylon e. Paper boxes o. Baby foods f. Wooden furniture p. Locomotives g. Toys and novelties q. Office machines equipment h. Coke r. Luggage i. Cooking utensils s. Paint j. Caskets t. Tires and tubes Solution: Job order cost procedure: (e), (f), (g), (i), (j), (k), (p), (q), (r) Process costing procedure: (a), (b), (c), (d), (h), (l), (m), (n), (o), (s), (t) Exercise 2--Job order cost sheet: Forge Machine Works collects its cost data by the job order cost accumulation procedure. For Job 642, the following data are available: Direct Materials Direct Labor 9/14 Issued \$ 1,200Week of Sep. 20 180 hrs @ \$6.20/hr 9/20 Issued 662Week of Sep. 26 140 hrs @ \$7.30/hr 9/22 Issued 480 Factory overhead applied at the rate of \$3.50 per direct labor hour. Required: 1. The appropriate information on a job cost sheet. 2. The sales price of the job, assuming that it was contracted with a markup of 40% of cost. Solution: 1. Forge Machine Works Job Order Cost Sheet--Job 642 Direct materials Direct labor Applied factory overhead Date Issued Amount Date (Week of) Hours Rate Cost Date (Week of) Hours Rate Cost 9/14 \$1,200 9/20 180 \$6.20 \$1,116 9/20 180 \$3.50 \$630

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9/20 662 9/26 140 7.30 1,022 9/26 140 3.50 490 9/22 480 -------- ---------- ---------- \$2,342 ===== \$2,138 ====== \$1,120 ====== 2. Sales Price of job 642, contracted with a markup of 40% of cost: Direct materials \$2,342 Direct labor 2,138 Applied factory overhead 1,120 Total factory cost \$5,600 Markup 40% of cost 2,240 ------- \$7,840 ===== Exercise 3--Job order costing: The Cambridge Company uses job order costing. At the beginning of the May, two jobs were in process: Job 369 Job372 Materials \$ 2,000 \$ 700 Direct labor 1,000 300 Applied factory overhead 1,500 450 There was no inventory of finished goods on May1. During the month, Jobs 373, 374, 375, 376, 378, and 379 were started. Materials requisitions for May totaled \$13,000, direct labor cost, \$10,000, and actual factory overhead, \$16,000. Factory overhead is applied at a rate of 150% of direct labor cost. The only job still in process at the end of May is No. 379, with costs of \$1,400 for materials and \$900 for direct labor. Job 376, the only finished job on hand at the end of May, has a total cost of \$2,000. Required:
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Exercise 1 - Exercise 1-Cost accumulation procedure...

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