Assignment #$1-$ Job Order Costing

Question $[$Chapters $2$ and $5](20$ marks$)$

Analysis of Cost Flows and Inventories under Job$-$Order Costing

Fastmix Inc. manufactures electric mixers and chopping tools. A job$-$order costing system is used,

since the products are manufactured in batches rather than on a continuous basis. The company

started operations on October $1,2023.$ Operating activities during the first $11$ months of the fiscal

year $($through August $31,2024)$ resulted in the following balances in selected accounts:

# The raw materials account includes $($both$)$ direct materials and indirect materials.

This figure represents the debits to the manufacturing overhead account for the first eleven

months of the year.

The following additional information is available on the company:

a$.$ The work$-$in$-$process inventory at August $31$ consisted of two jobs:

Total Cost

as of

b$.$ The finished goods inventory at August $31$ consisted of five separate items in stock:

Items

Quantity and Unit Cost

Total Cost

Professional mixers

$5,555$ units at $$22$ each

$$122,210$

Premium mixers

Brass choppers

Steel choppers

$115,000$ units at $$17$ each

$1,955,000$

$10,000$ units at $$14$ each

Mixer utensil set

$5,000$ units at $$16$ each

$140,000$

$100,000$ units at $$5$ each

$80,000$

$500,000$

$$2,797,210$c$.$ Manufacturing overhead is applied to jobs on a basis of direct labour$-$hours. For the fiscal year

$2024,$ management estimated that the company would work $450,000$ direct labour$-$hours and

incur $$3,150,000$ in manufacturing overhead costs.

d$.$ A total of $367,000$ direct labour$-$hours were worked during the first $11$ months of the year.

Items $($e$)$ through $($j$)$ below summarize the activity that took place in the company during the month of

September $2024.$

e$.$ A total of $$708,000$ in raw materials was purchased during the month.

f$.$ Raw materials were requisitioned as follows:

g$.$ The payroll during September was as follows:

h$.$ Other costs incurred in the factory during September were:

i$.$ Jobs completed during September and the units transferred to the finished goods warehouse

were as follows: j$.$ Finished products were shipped to customers during September as follows:

Items

Quantity

Professional mixers

$16,000$ units

Premium mixers

$32,000$ units

Base mixers

Costco mixers

$20,000$ units

Brass choppers

$22,000$ units

Steel choppers

Mixer utensil set

$10,000$ units

$26,000$ units

Required:

Determine the amount of under$/$over$-$applied manufacturing overhead for the fiscal year $2024$ and

indicate whether it is under$-$applied or over$-$applied. $(6$ marks$)$

$($i$)$ In general, what is the appropriate accounting treatment $($for management accounting

purposes, not IFRS$)$ for under$/$over$-$applied overhead $($at September $30,2024).(2$ marks$)$

$($ii$)$ For Fastmix, discuss the appropriate accounting treatment $($for management accounting

purposes, not IFRS$)$ for underlover$-$applied overhead $($at September $30,2024)?(2$ marks$)$

Determine the dollar balance in the work$-$in$-$process inventory account as of September $30,2024.$

Show all computations. $[$lgnore any under$/$over$-$applied overhead.$](5$ marks$)$

For the Professional mixers, determine the dollar balance in the finished goods inventory account

as of September $30,2024.$ Assume a FIFO $($first$-$in$-$first$-$out$)$ flow of units. Show all computations.

$[$lgnore any under$/$over$-$applied overhead.$](5$ marks$)$

$[$For those of you who are taking $293$ as a co$-$requisite: Assume that a manufacturing

company had $200$ units in Beginning FGI and it sold $1,000$ units this period. FIFO

means: the $200$ units $($from BFGI$)$ were sold first and, thus, the other $800$ units must have

been manufactured this period.$]$