Problem 1

The Riverside Company had the following inventories on Aug. 1 of the current year.

Finished Goods 62,500

Work in Process 46,250
Materials 55,000
The work in process account controls two jobs

Job 401 Job 402

Materials 7,500 14,000
Labor 6,250 7,500
Factory Overhead 5,000 6,000
18,750 27,500
The following information pertains to August operations:

1) Materials purchased on account, 70,000.

2) Materials issued for production, 62,500. Of this amount, 7,500 was for indirect materials: the difference was distributed:
13,750 to Job 401; 17,500 to Job 402; and 23,750 to Job 403.
3) Materials returned to the warehouse from the factory, 2,000, of which 750 was for indirect materials, the balance from Job
403.
4) Materials returned to vendors, 2,500.
5) Payroll after deducting 7,562.50 for withholding taxes, 4,000 for SSS Premiums, 937.50 for Medicare, and 3,000 for Pag-
Ibig, was 82,000. The payroll due the employees was paid during the month.
6) The payroll was distributed as follows: 26,000 to Job 401; 31,250 to Job 402, 26,250 to Job 403 and the balance represents
the indirect labor.
7) The share of the employer for payroll was recorded – 5,000 for SSS Premiums, 937.50 for Medicare Contributions, and
3,000 for Pag-Ibig Funds.
8) Factory overhead, other than any previously mentioned, amounted to 37,500. Included in this figure were 7,500 for
depreciation of factory building and equipment, and 2,375 for expired insurance on the factory. The remaining overhead
was unpaid at the end of August.
9) Factory overhead was applied to production at the rate of 80% of direct labor cost
10) Jobs 401 and 402 were completed and transferred to the finished goods warehouse.
11) Job 401 was shipped and billed at a gross profit of 40% of the cost.
12) Cash collections from accounts receivable during August were 87,500.

Requirements:

1. Journal entries to record the above transactions

2. Job order costs sheet
3. Cost of goods sold statement

Problem 2

On December 31, 2022, after closing the ledgers of Solidarity Company contained these accounts and balances:

Cash 94,000
Accounts Receivable 100,000
Finished Goods 65,000
Work in Process 15,000
Materials 44,000
Machinery 70,600
Accounts Payable 118,750
Common Stock 200,000
Retained Earnings 69,850
Details of the three inventories are:
Finished Goods Inventory:
Item A - 2,000 units at 12.50 25,000
Item B - 4,000 units at 10.00 40,000
Total 65,000
Work in Process Inventory: Job 101 Job 102
 Direct Materials:
1,000 units at 5.00 5,000
400 units at 3.00 1,200
Direct Labor:
1,000 hours at 4.00 4,000
400 hours at 5.00 2,000
Factory Overhead:
Applied at 2.00/hour 2,000 800
Total 11,000 4,000
Materials Inventory:
Materials X - 4,000 units at 5.00 20,000
Materials Y - 8,000 units at 3.00 24,000
Total 44,000

During January, 2022, these transactions were completed:

a) Purchases on account: Material X – 20,000 units at 5.20; Material Y – 24,000 units at 3.75; indirect materials – 35,040.
b) Payroll totaling 220,000 was paid. Of the total payroll, 40,000 was for marketing and administrative salaries. Payroll
deductions consisted of 31,000 for withholding taxes, 7,000 for SSS premiums, 440 for Medicare contributions, 6,600 for
Pag-Ibig Funds.
c) Payroll is to be distributed as follows: Job 101 – 10,000 direct labor hours at 4.00, Job 102 – 16,000 direct labor hours at
5.00; Job 103 – 12,000 direct labor hours at 3.00; indirect labor – 24,000; marketing and administrative salaries – 40,000.
Employer’s payroll taxes are: SSS Premiums – 5%; Medicare Contribution – 0.2%; and Pag-Ibig Funds – 3%.
d) Materials were issued on a FIFO basis as follows: Materials X – 20,000 units (charged to Job 101); Material Y – 24,000
units (charged to 102); Materials X – 2,000 units and Materials Y – 5,000 units (charged to Job 103): (Note: Transactions
are to be taken in consecutive order). Indirect materials amounted to 15,040.
e) Factory overhead was applied to Jobs 101, 102, and 103 based on a ratee of 2.25 per direct labor hour.
f) Jobs 101 and 102 were completed and sold on account for 240,000 and 270,000, respectively.
g) After allowing 5% cash discount, a net amount of 494,000 was collected on accounts receivable.
h) Marketing and administrative expenses (other than salaries) paid during the month amounted to 30,000. Miscellaneous
factory overhead of 21,600 was paid. Depreciation on machinery was 4,000.
i) Payments on account, other than payroll paid, amounted to 170,000
j) The over or under-applied factory overhead is to be closed.

Required:

1. Open T-accounts and record balances from January 1 trial balance

2. Journalize the January transactions
3. Post January transactions to the general ledger, and subsidiary ledgers for materials and work in process.
4. Prepare a statement of cost of goods sold

Problem 3

Belleview Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of 4,375 and
two jobs in process, Job No. 101 2,500 and Job 102 1,875. During May, a summary of source documents reveals the following:

Job Number Materials Requisition Labor Time Tickets

Slips
101 3,125 3,625
102 4375 3,750
103 5,750 13,250 7,250 14,625
General use 1,000 1,500
Total 14,250 16,125

Belleview manufacturing overhead to jobs at an overhead rate of 80% of direct labor cost. Job No. 101 is completed during the
month.
Problem 4

Crankton Company begins operations on April 1, 2022. Information from job cost sheets shows the following

Manufacturing Costs Assigned

Job Number April May June Month Completed
101 6,500 6,750 May
102 5,875 4,750 2,500 June
103 1,500 April
104 7,250 5,250 June
105 6,500 4,750 Not yet complete

Each job was sold for 25% above its cost in the month following completion

Instructions:

1. Compute for the balance of Work in Process Inventory at the end of each month
2. Compute for the balance of the Finished Goods Inventory at the end of each month
3. Compute for the gross profit for May, June and July

Problem 5

Gigantic Corporation obtains the following information from its record for the month f august, 2022:

Jobs Completed and sold

Job 110 Job 220 Job 330
Direct materials cost 18,750 31,250 25,000
Direct labor cost 50,000 62,500 37,500
Factory overhead 31,250 37,500 25,000
Units manufactured 6,250 5,000 12,500
GP rate (based on sales) 20% 25% 30%
Required:

1. Prepare in summary form, the journal entries that would have been made during the month to record the above.
2. Prepare the scheduled showing the gross profit or loss for August.
a. For the business as a whole
b. For each job completed and sold

Problem 6

The following account balances were taken from the general ledger account of the Titanic Company during 2022:

Jan-01 Dec-31
Materials 75,000 100,000
Work in Process 106,250 137,500
Finished Goods 150,000 112,500
Factory Overhead Control 412,500
Applied Factory Overhead
(applied at a rate of 80% of direct labor) 400,000
Cost of Goods Sold 1,062,500
Requirements:

1. Journal entries to record the transactions that were entered in the above accounts for the year 2022.
2. Cost of Goods Sold Statement for the year 2022
3. Entry to close the Factory Overhead Control account and Applied Factory Overhead of Cost of Goods Sold.
Problem 7

The following inventory data relate to Forester Company for 2022

Beginning Ending
Finished Goods 112,500 137,500
Work in process 100,000 87,500
Direct Materials 118,750 112,500
Revenues and costs for the period
Sales 1,125,000
Cost of goods available for sale 968,750
Total Manufacturing costs 843,750
Factory overhead 218,750
Direct materials used 256,250
Required: Compute for the following for the year:

1. Direct materials purchased

2. Direct labor costs incurred
3. Cost of goods sold
4. Gross profit

Problem 8

The following data relate to Cornerstone Company for the month of July, 2022:

Job No. 101 Job No. 102 Job No. 103

In process, July 1
Materials 50,000 37,500
Labor 75,000 50,000
Overhead 93,750 62,500
Cost added in July
Materials 68,750 100,000 115,000
Labor 100,000 118,750 143,750
Actual overhead incurred in July amounted to 468,750. Job No. 101 and 102 were completed and transferred to finished goods
warehouse in July. Overhead is applied using a predetermined overhead rate. Job 101 was sold for 687,500

Requirements: compute for the following:

1. Work in process, July 1

2. Overhead assigned to production in July assuming same factory OH rate
3. Cost of goods manufactured
4. Cost of goods sold (actual)
5. Finished goods inventory, July 31

Problem 9

San Rafael Company provides you with the following information

Jan-01 Jan-31
Inventories: ? 62,500
Materials 100,000 118,750
Work in process 75,000 97,500
Finished Goods
January Transactions:
Purchases of materials 57,500
Factory overhead (75% of direct labor cost) 78,750
Selling and administrative expenses (12.5% of sales) 31,250
Factory overhead control 78,500
 Net Income for January 31,500
Indirect Materials used 1,250
Requirements:

1. Materials inventory, January 1

2. Cost of goods manufactured
3. Cost of goods sold (normal) for the month of January of the current year.

Problem 10

The following were taken from the books of Satellite Company

Jan-01 Mar-31
Raw Materials 335,000 208,750
Work in Process - -
Finished Goods 53,750 ?
(100 units) (300 units)
Direct materials used 2,309,625
Direct labor 2,657,250
Factory overhead 1,283,125
Sales (12,300 units at 668,750)
The company uses the FIFO method of costing inventories

Requirements:

1. The number of units manufactured

2. The cost of goods manufactured per unit
3. The cost of goods sold

Problem 11

The following T-accounts from the records of San Miguel Company have incomplete postings. However, the amounts shown therein
are correct:

Direct Materials Work in Process

Beg. Bal. 10,000 2,000 Beg. Bal. 1,000 25,000
30,000 15,000

Finished Goods Cost of Goods Sold

Beg. Bal. 2,500 18,000

Factory Overhead Control Factory Overhead Control

4,200 2,000 Beg. Bal. 25,000

Factory Overhead Applied

Additional information:

a. The debit of 15,000 to work in process represents direct materials issued for the month
b. Factory overhead is applied at a rate of 0.50 per direct labor hour
 c. Work ticket for the month totaled 10,000 direct labor hours. Factory workers receive 1.00 per hour.

Required: Compute for the following

1. Direct materials inventory, end

2. Direct labor charged to production
3. Defective materials returned to suppliers
4. Work in process, end
5. Finished goods inventory, end
6. Cost of goods sold

Problem 12

The Bedrock Company is a manufacturer of golf clothing. During the month the company cut and assembled 10,000 golf jackets.
One hundred of the jackets did not meet specifications and were considered “seconds”. Seconds are sold for 1,000 per jacket,
whereas first quality jackets sell for 2,500. During the month, Work in process was charged for 3,600,000 of materials, 4,000,000
of labor, and factory overhead is applied at 120% of direct labor (including allowance of 20% of direct labor for spoiled units)

Required: Entries required for each of the following conditions:

a. Loss due to spoiled work is spread over all jobs

b. Loss due to spoiled work is charged to this specific job. (factory overhead is applied at 100% of direct labor cost)
c. Compute the unit cost of the good units under (a) and (b)

Problem 13

Black Water Company manufactured golf carts and other recreational equipment. One order for RAGC Corporation for 2,000 carts
showed the following costs per unit: direct materials – 400; direct labor 200; and factory overhead applied at 140% of direct labor
cost if defective work is charged to a specific job and 150% if defective work is charged to all jobs.

Final inspection revealed that wheels were assembled with improper bearings. The wheels were disassembled and the proper
bearings inserted. The cost of correcting each defective cart consists of 20 added cost for bearings, 40 for labor and factory overhead
at the predetermined rate.

Required:

A. Prepare journal entries to record correction of the defective units and transfer of the work in process to finished goods if:
1. The RAGC is to be charged with the cost of defective units.
2. The cost of correcting the defective units is not charged to RAGC
B. Compute the cost per unit of finished goods if:
1. The RAGC is to be charged with the cost of defective units
2. The cost of correcting the defective units is not charged to RAGC

Multiple Choice – Problems

Silver Company’s 2022 manufacturing costs were as follows:

Direct materials and direct labor 125,000

Depreciation of manufacturing equipment 87,500
Depreciation of factory building 50,000
Janitor’s wages for cleaning factory premises 18,750
1. How much of these costs should be inventoried for external reporting purposes?
a. 262,500
b. 281,250
c. 481,250
d. 250,000

Paragon Company uses a job order cost system and applied factory overhead to production orders on the basis of direct labor cost.
The overhead rates for 2022 are 200% for Dept. A and 50% for Dept B Job 123, started and completed during 2022, was charged
with the following costs:
 Department
A B
Direct Materials 31,250 6,250
Direct Labor ? 37,500
Factory Overhead 50,000 ?
2. The total manufacturing costs associated with Job 123 should be
a. 300,000
b. 225,000
c. 243,750
d. 168,750

Polo Corporation has a job order cost system. The following debits (credits) appeared in the work in process account for the month
of March of the current year

March Description Amount

1 Balance 2,500
31 Direct materials 15,000
31 Direct Labor 10,000
31 Factory Overhead 8,000
31 To finished goods (30,000)
Polo applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No.30, the only job still in process
at the end of March, 2022 has been charged with direct labor of 1,250.

3. The amount of direct materials to Job was

a. 3,250
b. 5,500
c. 15,000
d. 1,875

Brent Industries has two production departments. ABC and XYZ, and uses a job order cost system. To determine manufacturing
costs, the company applies manufacturing overhead to production orders based on direct labor cost using the departmental rates
predetermined at the beginning of the year based on the annual budget. The 2022 budget for the two departments was as follows:

ABC XYZ
Direct Materials 630,000 90,000
Direct labor 180,000 720,000
Factory Overhead 540,000 360,000
Actual materials and labor costs of Job No. 678 during 2022 were as follows:

Direct Materials 22,500

Direct labor – ABC 7,200
Direct labor – XYZ 10,800
4. What was the total manufacturing costs associated with Job No. 678 for 2022?
a. 45,000
b. 49,500
c. 58,500
d. 67,500

The Work-in-Process account of the Rainbow Company follows:

Work in Process
April 1 Bal. 25,000 Finished Goods 125,450
DM 50,000
DL 40,000
FOA 30,000
Overhead is applied to production at a predetermined rate, based on direct labor cost. The work in process at April 30, 2022
represents the cost of Job No. 456, which has been charged with direct labor cost of 3,000, and Job No. 789, which has been charged
with applied overhead of 2,400.

5. The cost of direct materials charged to Job No. 456 and Job 789 amounted to:
a. 8,700
b. 7,600
c. 4,500
 d. 4,200
6. The prime cost during the month amounted to:
a. 70,000
b. 90,000
c. 120,000
d. 145,000

The Pentagon Company uses a job order cost accounting system. Overhead is applied to production at a predetermined rate of 80%
bases on direct labor cost. The following postings appear in the ledger accounts of the company for the month of September.

Debit
Work in process, Sept. 1 30,000
Direct Materials 60,000
Direct labor 50,000
Factory overhead 40,000
Cost of goods completed (155,000)
Job No. 327 was the only job not completed in September, and it has been charged 4,600 for factory overhead.

7. Direct materials charged to Job No. 327 was:

a. 10,350
b. 20,000
c. 25,000
d. 14,650
8. Direct labor charged to Job. 327 was:
a. 5,750
b. 6,784
c. 8,280
d. 8,480

Trinity Company uses job-order costing. Factory overhead is applied to production at a budgeted cost of 150% of direct labor costs.
Any over-applied or under-applied factory overhead is closed to the cost of goods sold account at the end of each month. Job 101
was the only job in process at January 31 with accumulated cots as follows:

Direct Materials 5,000

Direct Labor 2,500
Factory overhead applied 3,750
Total 11,250
Jobs 102, 103 and 104 were started during February. Direct materials requisitions for February totaled 32,500. Direct labor costs f
25,000 were incurred for February. Actual factory overhead was 40,000 for February. The only job still in process at February 28,
was Job 104, with costs of 3,500 for direct materials and 2,250 for direct labor.

9. The cost of goods manufactured for February was:

a. 106,250
b. 97,500
c. 99,625
d. 97,125

The following information related to Job No. 2468, which is being manufactured by Anderson Company to meet customer’s order

Department A Department B
Direct Materials used 6,250 3,750
Direct labor hours used 500 250
Direct labor rate per hour 5.00 6.25
Overhead rate per DL hour 5.00 5.00
Administrative and selling expenses 20% of full production cost
Profit markup 25% of selling price
10. The amount billed to the customer for Job 2468 is:
a. 20,312.50
b. 26,000.00
c. 21,666.25
d. 13,500.00
Horseman Corporation has manufactured 100,000 units of compound X in 2022 at the following costs. Labor of 242,500 of which
93% represents direct labor, materials of 182,500 of which 90% represents direct materials. Opening work in process is 88,125.
Closing work in process inventory is 67,500. Overhead is applied at 125% of direct labor cost.

11. The cost of goods manufactured is

a. 671,150
b. 692,306
c. 651,036
d. 629,900

San Jose Company employs the job order cost system. Relevant data for the month just ended are summarized below.

a. Work in process beginning 125,000

b. Direct materials used for the month 250,000
c. Direct labor costs for the month 200,000
d. Overhead applied based on direct labor 150,000
e. Cost of goods completed 627,250
f. Ending work in process referred to Job
106 which was charged with direct
labor of 15,000 and Job 107 charged
with overhead 12,000
12. The cost of direct materials charged to Jobs 106 and 107 was
a. 37,500
b. 21,000
c. 43,500
d. 45,000

Westminster Crafts manufactures to customer order using the Job order cost system. For the month just ended, it registered the
following data:

Beginning work in process (5 partially completed jobs) 375,000

Orders completed (18) 3,000,000
Orders shipped (14) 2,500,000
Materials requisitioned for the month 2,125,000
Direct labor cost 1,000,000
Factory overhead rate 150% of direct labor cost
13. The ending work in process was
a. 1,750,000
b. 625,000
c. 2,000,000
d. 875,000

Marshall Company uses a job order costing system and the following information is available from the records. The company has
3 jobs in process: 501, 502 and 503.

Raw materials used 120,000

Direct labor per hour 8.50
Overhead applied based on direct labor cost 120%
Direct material was requisitioned as follows for each job, respectively: 30%, 25% and 25% the balance of the requisitions were
considered indirect. Direct labor hours per job are 2,500, 3,100, and 4,200, respectively. Indirect labor is 33,000. Other actual
overhead costs totaled 36,000.

14. What is the total amount of actual factory overhead?

a. 36,000
b. 69,000
c. 93,000
d. 99,960
15. If Job 503 is completed and transferred, how much is the total cost transferred to Finished Goods Inventory?
a. 96,700
b. 99,020
c. 108,540
d. 139,540
Work in process of Veteran Corporation on July 1 (per general ledger) is 22,800.

Per cost sheets: Job 101 Job 102

Direct Materials 6,000 8,000
Direct labor 3,000 2,500
Amount charged to Work in process for July of the current year
Job 101 Job 102 Job 103 Job 104
Direct materials 3,000 2,000 6,000 4,500
Direct labor 1,000 1,500 2,600 2,000
Factory overhead is applied to production based on direct labor cost. Jobs 101 and 103 are completed during the month

16. Cost of goods put into process must be:

a. 42,100
b. 26,860
c. 45,400
d. 49,660
17. The cost of goods manufactured for the month of July is
a. 21,600
b. 15,400
c. 25,560
d. 31,800

Baxter Corporation has a job order cost system. The following debits (credits appeared in the general ledger account work-in-process
for the month of September:

September 1 Balance 15,000

September 30 Direct Materials 50,000
September 30 Direct Labor 37,500
September 30 Factory Overhead 33,750
September 30 Finished Goods (125,000)
Baxter applies overhead to production at a predetermined rate of 90% based on the direct labor cost. Job no. 232, the only job still
in process at the end of September of the current year has been charged with factory overhead of 2,812.50.

18. The cost of direct materials charged to job 232 at month-end was
a. 5,312.50
b. 3,125.00
c. 2,812.50
d. 11,250.00

Incomplete accounts of the Federal company appear as follows on January 31.

Materials Inventory Work in Process

Bal. 18,750 2,000 Bal. - CofGM 50,000
Purch. 43,750 Materials 25,000
Labor ?
OH ?
Finished Goods
Bal. 2,500 CofGS 25,000
CofGM

Zusätzliche Informationen

a. There were 5,500 direct labor hours at the rate of 8.00 per direct labor hour
b. Overhead is applied at the rate of 4.00 per direct labor hour

19. The January 31 of materials inventory should be

a. 37,500
b. 31,250
c. 25,000
d. 62,500
20. The total overhead that have been charged to work in process during Jabuary
 a. 21,250
b. 50,000
c. 41,250
d. 27,500
21. The January 31 balance of the Work in Process account
a. 93,750
b. 57,500
c. 95,000
d. 102,500

The following information is taken from the records of the Serrano Manufacturing Company for the first quarter of 2022

January 1, 2022 March 31, 2022

Raw materials inventory 32,200 34,100
Work in process inventory 38,500 33,050
Finished goods inventory 44,600 48,800
Direct labor 254,000
Factory overhead cost 236,900
Cost of goods sold 678,300
22. The cost of goods manufactured during the first quarter was
a. 676,100
b. 243,000
c. 682,500
d. 713,350
23. The total cost of goods placed in process was
a. 680,500
b. 645,450
c. 715,550
d. 719,050
24. The cost of raw materials used was
a. 263,150
b. 186,150
c. 224,650
d. 286,150

Job 213 required direct materials costing 20,000 and direct labor costing 5,000 (300 hours). Additionally, factory overhead of 0.80
per direct labor cost is charged to the job. It was discovered that the labor cost shown was 125% of the correct amount due to
erroneous overtime premiums.

25. The correct cost of Job 213

a. 24,240
b. 27,200
c. 28,000
d. 28,000

Harper Company’s Job 301 for the manufacture of 2,200 T-shirts was completed during August 2022 at the following unit costs:

Direct materials 20.00

Direct labor 18.00
Factory overhead (includes an 18.00
allowance of 1 for spoiled work)
56.00
Final inspection of Job 301 discloses 200 spoiled T-shirts which were sold to a jobber for 6,000.

26. Assume that spoilage loss is charged to all production during August. What would be the unit cost of the good units
produced on Job 301?
a. 53.00
b. 55.00
c. 56.00
d. 58.00
27. Assume instead, that the spoilage loss is attributable to exacting specification of Job 301 and is charged to this specific job.
What would be the unit cost of the good coats produced on Job 301?
a. 55.00
b. 57.50
 c. 58.60
d. 61.60

Job 75 incurred the following costs for the manufacture of 200 units of motors:

Original cost accumulation

Direct materials 13,200
Direct labor 16,000
Factory overhead (150% of direct labor) 24,000
Direct costs of reworked 10 units
Direct materials 2,000
Direct labor 3,200
The total rework costs were attributable to exacting specifications of Job 75 and the full rework costs were charged to the specific
job.

28. The cost of Job 75 was

a. 316
b. 266
c. 280
d. 292

During March, Mark Company incurred the following costs on job 209 for the 200 motors:

Original cost accumulation

Direct materials 660
Direct labor 800
Factory overhead 1,200
2,660
Direct costs of reworked 10 units
Direct materials 100
Direct labor 160
260
Method A- the rework cost were attributable to the exacting specifications of Job 209, and the full rework costs were charged to this
specific job.

Method B- the defective units fall within the normal range and the rework is not related to a specific job, or the rework is common
to all the jobs.

29. The cost per finished unit of job 209 using Method A is:
a. 15.60
b. 15.80
c. 13.30
d. 13.50
30. The cost per finished unit of Job 209 using Method B is:
a. 13.30
b. 15.80
c. 15.30
d. 13.60

Viber company manufactures electric drills to the exacting specifications of various customers. During February 2014, Job 403 for
the production of 1,100 drills was completed at the following costs per unit:

Direct materials 100

Direct labor 80
Factory overhead 120
Total 300
Final inspection of Job 403 disclosed 50 defective units and 100 units of normal spoilage. The defective drills were reworked at a
total cost of 5,000 and the soiled drills were sold to a jobber for 15,000.

31. The unit cost of good units produced on Job 403 was:
a. 330
b. 320
 c. 300
d. 290

During August 2022, Job 067 for 2,000 handsaws was completed at the following cost per unit:

Direct materials 5.00

Direct labor 4.00
Factory overhead (applied at 150% of direct labor) 6.00
Final inspection revealed 100 defective units, which were reworked at a cost of 2.00 per unit for direct labor plus overhead at the
predetermined rate.

32. If the defect is due to internal failure, what is the total rework cost and to what account should it be charged?
Rework cost Accounts charged
a. 200 Work in process
b. 200 Factory overhead control
c. 500 Work in process
d. 500 Factory overhead control