JOB ORDER COSTING
JOURNAL ENTRY
1. Raw materials
Accounts payable
2. Work in process
Raw materials
3. Salaries expense
Salaries payable
4. Work in process
Salaries expense
5. Depreciation expense
Utilities expense
Rent expense
Accumulated depreciation
Utilities payable
Rent payable
6. Overhead – control
Depreciation expense
– Actual Overhead Cost
Utilities expense
Rent expense
7. Work in process
Overhead – applied – Standard Cost / Normal Cost
8. Overhead – applied
Overhead – control
Difference Immaterial – Cost of Goods Sold
Material – Work in process
– Finished Goods
– Cost of Goods Sold
FORMULA:
Work in process xxx
Divide: Total Units xxx
Unit Cost P xxx
Direct materials used P xxx
Direct labor xxx
Overhead xxx
Total Manufacturing Cost xxx
Work in process, beginning xxx
Less: Work in process, ending (xxx)
Cost Goods Manufactured xxx
Finished goods, beginning xxx
Less: Finished goods, ending (xxx)
Cost of Goods Sold P xxx
PROBLEM 1:
The following data were taken from the records of Subscribe to Sir Brad Fitt
Company:
8/31/2020 9/30/2020
Inventories:
Raw materials P? P 50,000
Work in process 80,000 95,000
Finished goods 60,000 78,000
• Raw materials purchased amount to P 46,000.
• Factory overhead amount to P63,000 which is 75% of direct labor cost.
• Selling and administrative expenses amount to P25,000 which 8% of sales.
• Net income for September 2020, P40,000
Compute for the following:
a. Total manufacturing cost
Cost of Goods Manufactured P 265,500
Work in process, ending 95,000
Work in process, beginning (80,000)
Total Manufacturing Cost P 280,500
b. Cost of goods manufactured
Cost of goods sold P 247,500
Finished goods, ending 78,000
Finished goods, beginning (60,000)
Cost of Goods Manufactured P 265,500
c. Cost of goods sold
Sales (P25,000 / 0.08) P 312,500
Net income (40,000)
Operating expense (25,000)
Cost of Goods Sold P 247,500
d. Raw materials, Aug. 31
Total manufacturing cost P 280,500
Direct labor (P63,000 / 0.75) (84,000)
Factory overhead (63,000)
Direct Materials P 133,500
Raw materials, ending P 50,000
Direct materials 133,500
Purchases (46,000)
Raw materials, beginning P 137,500
PROBLEM 2:
BSBAA Company uses job order costing. At the beginning of August, two jobs were
in process:
Job 769 Job 772
Materials P 80,000 P 28,000
Direct Labor 40,000 12,000
Applied factory overhead 60,000 18,000
• There was no inventory of finished good August 1.
• During the month of August, Job 773, 774, 776, 778, and 779 were started.
• Materials requisitions for August totaled P520,00, direct labor cost P400,000, and
actual factory overhead P640,000.
• The only job still in process at the end of August is Job 779, with cost of P56,000
materials and P36,000 for direct labor.
• Job 776, the only finished job on hand at the end of August has a total cost of
P80,000.
Question:
The cost of goods sold at normal is:
a. P 1,572,000
b. P 1,532,000
c. P 1,600,000
d. P 1,652,000
Direct materials P 520,000
Direct labor 400,000
Applied factory overhead (P400,000 x 1.5*) 600,000
Total manufacturing cost 1,520,000
Work in progress, beginning** 238,000
Work in progress, ending*** (146,000)
Cost goods manufactured 1,612,000
Finished goods, beginning -
Finished goods, ending (80,000)
Cost of Goods Sold P 1,532,000
Notes:
*Applied factory overhead P 60,000
Divide: Direct Labor 40,000
Applied Factory Overhear Ratio Against Direct Labor 1.5
** Job 769 Job 772 Total
Materials P 80,000 P 28,000 P 108,000
Direct Labor 40,000 12,000 52,000
Applied factory overhead 60,000 18,000 78,000
Work in Progress, Beginning P 238,000
***Materials P 56,000
Direct Labor 36,000
Applied factory overhead (P36,000 x 1.5) 54,000
Work in Progress, Beginning P 146,000
