Q3 Part 2 Problem On Job Order Costing

Q3 Part 2 Problem Solving on Job Order Costing 1st Semester A.Y.
2021-2022
Problem 1
S5Tank Co. uses a job order costing system and the following information is available from its records. The
company has 3 jobs in process: #5, #8, and #12.
Raw material used P120,000
Direct labor per hour P8.50
Overhead applied based on
direct labor cost 120%
Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the
balance of the requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200;
respectively. Indirect labor is P33,000. Other actual overhead costs totaled P36,000.
Required:
1. What is the prime cost of Job #5?

2. What is the total amount of overhead applied to Job #8?
3. What is the total amount of actual overhead?
4. How much overhead is applied to Work in Process?
5. If Job #12 is completed and transferred, what is the balance in Work in Process Inventory at the end of the
period if overhead is applied at the end of the period?
6. Assume the balance in Work in Process Inventory was P18,500 on June 1 and P25,297 on June 30. The balance
on June 30 represents one job that contains direct material of P11,250. How many direct labor hours have been
worked on this job (rounded to the nearest hour)?
Answers:
1. P57,250 [120,000 x 30% + (8.5x2500)]

2. P31,620 [3,100x8.5 x1.2]
3. P93,000 [24,000 from RM + 33,000 +36,000]
4. P99,960 [sum all DL hours x 8.5 x 1.2]
5. P170,720 [(120,000 x 55%)+(5,600x8.5)+(47,600x1.2)
6. 751 [(25,297-11,250)/2.2)/8.5)
Problem 2
Aye Co. uses a job order costing system. During April 2001, the following costs appeared in the
Work in Process Inventory account:
Beginning balance P 24,000

Direct material used 70,000
Direct labor incurred 60,000
Applied overhead 48,000
Cost of goods manufactured 185,000
Aye Co. applies overhead on the basis of direct labor cost. There was only one job left in WIP
Inventory at the end of April which contained P5,600 of overhead. What amount of direct
material was included in this job?
Answer: P4,400
Solution:
Work In Process, Beg P24,000

Manufacturing Cost:
Direct Material Used 70,000
Direct labor incurred 60,000
Applied Overhead 48,000 178,000
Goods Available for Production 202,000
Cost of Goods Manufactured (185,000)
Work in Process, End 17,000
Breakdown of the WIP End:

Balance P17,000
Overhead (5,600)
Direct Labor (7,000) [5,600/80%]
Direct Material P4,400
How to compute the predetermined OH rate:

1. Since the overhead applied is based on direct labor cost, we can use the data above 48,000/60,000.
2. 80% is the answer, which means in every direct labor cost, 80% of that amount is equal to the OH
applied.
3. Ending WIP end contains P5,600 Overhead, gross it up using 80% to get the direct labor cost.
Problem 3
Elemenopi Co. is a print shop that produces jobs to customer specifications. During January
2001, Job #1253 was worked on and the following information is available:
Direct material used P2,500

Direct labor hours worked 15
Machine time used 6
Direct labor rate per hour P7
Overhead application rate per
hour of machine time P18
What was the total cost of Job #1253 for January?
Answer: P2,713
Solution:
Direct Material Used P2,500

Direct labor cost (15x7) 105
OH Cost (18 x 6) 108
Total Cost of Job P2,713
Problem 4
The following information pertains to XYZ Co. for September 2001.
Direct Material Direct Labor Overhead

Job #123 P3,200 P4,500 ?
Job #125 ? 5,000 ?
Job #201 5,670 ? P5,550
XYZ Co. applies overhead for Job #123 at 140 percent of direct labor cost and at 150 percent of
direct labor cost for Jobs #125 and #201. The total cost of Jobs #123 and #125 is identical.
1. What amount of overhead is applied to Job #123?
Answer: P6,300
P4,500 x 140% = P6,300
2. What amount of overhead is applied to Job #125?
Answer: P7,500
P5,000 150% = 7,500
3. What is the amount of direct material for to Job #125?
Answer: P1,500
Job #123 = P3,200 + 4,500 + 6,300

= 14,000
Job #125 = 14,000

Direct Labor (5,000)
Overhead (7,500)
Direct Materials P1,500
4. Assume that Jobs #123 and #201 are incomplete at the end of September. What is the
balance in Work in Process Inventory at that time?
Answer: P28,920
Job #123 = 14,000

Job #201 = P5,670 +5,550 + (5,550/150%) 14,920
P28,920
Problem 5
HAYNAKU Company manufactures custom-built conveyor systems for factory and commercial
operations. Cardo Dalisay is the cost accountant for HAYNAKU and he is in the process
of educating a new employee, Popoy Bash, about the job order costing system that
HAYNAKU uses. (The system is based on normal costs; overhead is applied based on
direct labor cost and rounded to the next whole dollar.) Cardo gathers the following job
order cost records for May:
Direct Direct Total
Job No. Materials Labor Applied OH Cost

667 P 5,901 P1,730 P 1,990 P 9,621
669 18,312 1,810 2,082 22,204
670 406 500 575 1,481
671 51,405 9,500 10,925 71,830
672 9,615 550 633 10,798
To explain the missing job number, Cardo informed Popoy that Job #668 had
been completed in April. He also told him that Job #667 was the only job in process at
the beginning of May. At that time, the job had been assigned P4,300 for direct
material and P900 for direct labor. At the end of May, Job #671 had not been
completed; all others had. Cardo asked Popoy several questions to determine whether
he understood the job order system.
Required: Help Popoy answer the following questions:

a. What is the predetermined overhead rate used by HAYNAKU Company?
b. What was the total cost of beginning Work in Process inventory?
c. What was total prime cost incurred for the month of May?
d. What was cost of goods manufactured for May?
ANSWER:
a. Use any job started in May:
Rate = MOH JOB P670 P575 = 115%/DL Cost
DL COST P500
b. DM P4,300
DL 900
FOH 1,035 (P900 × 115%)
P6,235
c. Prime Cost =DM + DL
DM = P85,639 – 4,300 = P81,339
DL = 14,090 – 900 = 13,190
P94,529
d. COGM = P9,621 + 22,204 + 1,481 + 10,798 = P44,104

Problem 6
HUHUHU Company’s payroll records show the following information for November 16-31.
HUHUHU Company is operating five days per week.
Employee Working Days Rate Regular Previous Salary

OT Hrs Nov 1-15
Spongebob 11 P200/day 4 P2,400
Patrick 11 140/day 6 2,000
Sandy 9 180/day 4 1,620
Assumptions on Deductions:
a. The monthly contributions are only deducted on the 16th to 30th payroll.
b. Wtax on Compensation is 4% of monthly gross salary
c. SSS is 4.5% of monthly gross salary (employee share)
d. Philhealth is 3.5% of monthly gross salary (employee share)
e. Pag-IBIG is 2% of monthly gross salary (employee share)
Job #121 was done by Spongebob and Patrick, and Job #122 for Sandy. Job #121 has Direct Materials
Cost amounting to P8,000 and P7,600 for Job #122. Overhead application rate for both jobs is 80% of
direct labor. Assume that labor cost is classified as direct labor. Only Job #122 is left in the production as
of month end.
Required:
1. Compute the following in relation to the labor cost:

a. Regular Pay (Nov 16-30) of all employees
b. Overtime (Nov 16-30) of all employees
c. Gross Pay (Nov 16-30) of all employees
d. Total Wtax of all employees (employee share)
e. Total SSS Payable of all employees (employee share)
f. Total Philhealth Payable of all employees (employee share)
g. Total Pag-IBIG Payable of all employees (employee share)
h. Total Deductions of all emplpyees
i. Net Salary of all employees (for Nov 16 to 30)
2. How much is the cost of goods manufactured?

3. How much is the cost of Job 121?
4. How much is the WIP ending?
Solution:
Payroll for the Period November 16 to 30, 20xx
Deductions
Employee Name Days of Work Rate Regular Pay Overtime Gross Pay Net Salary
Wtax SSS PhilHealth Pag-IBIG Total
Spongebob 11 P200/day 2,200.00 125.00 2,325.00 189.00 212.63 165.38 94.50 661.50 1,663.50
Patrick 11 140/day 1,540.00 131.25 1,671.25 146.85 165.21 128.49 73.43 513.98 1,157.28
Sandy 9 180/day 1,620.00 112.50 1,732.50 134.10 150.86 117.34 67.05 469.35 1,263.15
Total 5,360.00 368.75 5,728.75 469.95 528.69 411.21 234.98 1,644.83 4,083.93
Journal Entries:
Salaries Expense P5,728.75

Wtax Payable P469.95
SSS Payable 528.69
PhilHealth Payable 411.21
Pag-IBIG Payable 234.98
Salaries Payable 4,083.93
2. Cost of Goods Manufactured (Job #121)

Direct Labor 3,996.25 (Spongebob and Patrick Gross Pay Nov 16 to 30)
Direct Labor 4,400 (Nov 1 to 15)
Overhead 6,717 (80% of direct labor)
Total P23,113.25
3. Job #121 = P23,113.25
4. WIP Ending (Job #122)

Direct Labor 1,732.50 (Sandy Gross Pay (Nov 16 to 30)
Direct Labor 1,620 (Sandy Nov 1 to 15)
Overhead 2,682 (80% of direct labor)
Total 13,634.50

Q3 Part 2 Problem On Job Order Costing

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Q3 Part 2 Problem Solving on Job Order Costing 1st Semester A.Y.

Raw material used P120,000

Direct labor per hour P8.50

Overhead applied based on

direct labor cost 120%

1. What is the prime cost of Job #5?

1. P57,250 [120,000 x 30% + (8.5x2500)]

Beginning balance P 24,000

Work In Process, Beg P24,000

Breakdown of the WIP End:

How to compute the predetermined OH rate:

Direct material used P2,500

What was the total cost of Job #1253 for January?

Direct Material Used P2,500

The following information pertains to XYZ Co. for September 2001.

Direct Material Direct Labor Overhead

1. What amount of overhead is applied to Job #123?

P4,500 x 140% = P6,300

2. What amount of overhead is applied to Job #125?

P5,000 150% = 7,500

3. What is the amount of direct material for to Job #125?

Job #123 = P3,200 + 4,500 + 6,300

Job #125 = 14,000

Job #123 = 14,000

Direct Direct Total

Job No. Materials Labor Applied OH Cost

669 18,312 1,810 2,082 22,204

670 406 500 575 1,481

671 51,405 9,500 10,925 71,830

672 9,615 550 633 10,798

Required: Help Popoy answer the following questions:

a. Use any job started in May:

Rate = MOH JOB P670 P575 = 115%/DL Cost

FOH 1,035 (P900 × 115%)

c. Prime Cost =DM + DL

DM = P85,639 – 4,300 = P81,339

DL = 14,090 – 900 = 13,190

d. COGM = P9,621 + 22,204 + 1,481 + 10,798 = P44,104

Employee Working Days Rate Regular Previous Salary

Spongebob 11 P200/day 4 P2,400

Patrick 11 140/day 6 2,000

Sandy 9 180/day 4 1,620

1. Compute the following in relation to the labor cost:

2. How much is the cost of goods manufactured?

Payroll for the Period November 16 to 30, 20xx

Salaries Expense P5,728.75

2. Cost of Goods Manufactured (Job #121)

3. Job #121 = P23,113.25

4. WIP Ending (Job #122)

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