MYRA Company practices job order costing in determining the cost of its products. In October, the Company
Question:
MYRA Company practices job order costing in determining the cost of its products. In October, the Company is completing two orders, of which MX-1120 work was started in September and MZ-1131 work was received in October. On October 1, the Company's accounting records show the following information:
Work in process inventory (Work MX-1120) RM24,480
Ready goods inventory (Work MZ-1130) 46,700
Raw material inventory 4,500
Details for the beginning inventory of work in process are as follows:
Kos involved in September:
MX-1120 work Direct materials RM 10,080
Direct labor RM 6,000
Manufacturing overhead (absorbed) RM 8,400
The total cost is RM 24,480
The accounting records also show that the following transactions occurred in October:
1) Purchase of raw materials RM14,500 on credit.
2) The use of raw materials for each job is as follows:
Direct Materials Indirect Materials
Work MX-1120 RM 6,720 RM 1,200
Work MZ-1131 RM 3,080 RM 880
3) Direct labor is paid a salary of RM20.00 per hour. The use of direct labor hours for each job is as follows:
MX-1120 Labor: 200 direct labor hours
MZ-1131 Work: 120 direct labor hours
4) Apply manufacturing overhead cost to direct labor cost basis.
5) The utility bill amounts to RM2,800, 70% is for factory use and the rest is for administration.
6) Unpaid factory rent amounting to RM1,400.
7) Depreciation on factory equipment amounting to RM1,000.
8) Cost of lapsed manufacturing insurance amounting to RM1,500.
9) Various manufacturing costs paid in cash amount to RM850.
10) Work on X-1120 was completed in October. While the work of Z-1131 is at the level of 40% of the production process.
11) Job sales in October were:
Work MZ-1130 RM 60,050
Work MX-1120 RM 51,200
Be required:
a) Prepare a journal entry to record the transactions that occurred during the month
October.
b) Prepare manufacturing overhead control accounts and journal entries
adjustment for
eliminate overhead variances at the end of the month. Overhead deviations are considered no
material.
c) State two (2) types of business that may be suitable to use the system
job order costing. Explain.
d) Explain the purpose of the job cost sheet in job order costing.
Intermediate Accounting
ISBN: 978-0071339476
Volume 1, 6th Edition
Authors: Beechy Thomas, Conrod Joan, Farrell Elizabeth, McLeod Dick I