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Case Study 1

The general ledger of Diamonds in the Rough Ltd, a manufacturing firm

operating a job cost system, included the following balances at May 31:


$

 

Raw Materials Control

35,000

 

Labour Control

3,375

(Cr.)

Factory Overhead Applied

420

(Cr.)

Work in Process

16,150

 

Finished Goods

17,075

 

Particulars of jobs in process and the job completed were:


Job No.

Material

Labour

Overhead

Total

In process

323

$ 6,750

$ 3,000

$ 3,600

$ 13,350

324

1,700

500

600

2,800

Completed

322

6,350

4,875

5,850

17,075



During the month of June, the following transactions occurred:


$

$

Materials purchased on credit

24,700

Factory wages paid

- Gross

29,000

- PAYG Tax

6,700

22,300

Factory rent paid

2,500

Invoices for sundry factory overhead items

2,000


Depreciation at 15% per annum is to be charged on factory plant valued at $160,000.


Material issued to the factory and labour charged for the month were:


Job No.

Material

Labour

323

$     nil

1,175

324

5,600

4,400

325

12,000

9,250

326

4,500

1,000

Indirect

3,000

9,800

25,100

25,625

Factory overhead is applied using a rate of 120% of direct labour cost. Any over/under-applied overhead is transferred to cost of goods sold at June 30. At 30 June, Job No. 326 was incomplete. Job Nos 322, 323 and 324 had been completed and sold on credit, while Job No. 325 was still in the finished goods warehouse. The jobs sold had a total sales value of $81,744.

 

Task 1


Prepare and balance the following accounts (a single ledger is used):


a.      Raw Materials Control                         

b.      Labour Control       

c.      Factory Overhead Control 

d.      Factory Overhead Applied

e.      Work in Process                                     

f.       Finished Goods

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