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Mastery Problem: Job Order Costing

Purl of Great Price Company

Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.

Each knitter has a knitting machine that is used about 2/3 of the knitters time, the rest of the knitters time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.

The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.

Mastery Problemi Job Order Costing Purl of Great Price Company Maria Young lie the sole stockholder of Purl of Great Price Company (POGP Coman), which produces high-end me waiters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office managerinting supervisor (this employee works 20 hours per week as me manager, and 20 hours per as knitting supervisor). Al wages are paid cash at the end of each month Each interesitting machine that is used about 2/3 ofery time, the rest of the time being wolved in hand knitting and placing together the garments. The company was a machine was to wrap the garments in plastic for shipping, which is operated by the office manage to supervisor Approximately hours per week The knitting machines were purchased on January 1 of the current year, and cost $2.400 cc, with an attestate of 10 years and to swagevole. The packaging machine wa surchased on the same date and cost $4,000, with the same anticipated and save Value Nov. 30 Trial Balance POGP Company Trial Balance November 30, 20Ya Account Title Debi Cred Cash 20,000 Accounts Receivable 1.000 Supplies 200 Materials 5,000 Work in Process 5,404 Equipment Accumulated Depreciation.opment 125 Accounts Payable 150 Common Stock 10,000 Retained Earnings 12,000 12.000 Check My Wok Trial Balance November 30, 2018 Account The Debit Credit Cach 20,000 Accounts Receivable 2,000 Supplies 200 Materials 5,000 Work in Process 5,401 Equipment 12.000 Accumulated Depreciation Equipment 825 Accounts Payable 150 Common Stock 10,000 Retained Earnings 12,000 Dividends 18,096 Sales 307,500 Cost of Goods Sold 255,040 Factory Overhead 15 Wages Exponse 13,750 330,400 330,490 Predetermined Factory Overhead Rate Since the company more reliant on labor than machines, Maria decides to use direct labor hours (DH) as the activity but for her predetermined actory over rate, rather than Estimated Selected Amounts for the Year Estimated depreciation on equipment $1,200 Estimated total omce Manager/ King Supervisor wages 320,000 Predetermined Factory Overhead Rate Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DH) as the activity base for her predetermined factory overhead rate, rather than machine hours (M) Estimated Selected Amounts for the Year Estimated depreciation on equipment $1.200 Estimated total Office Manager/Knitting Supervisor wages $36.000 Estimated orice utilities $6,000 Estimated factory utilities 34,800 Estimated factory rent $24,000 Activity Base Data Estimated number of DL for the year 5,000 Estimated number of for the year 3,500 Compute the predetermined factory overhead rate for the current year. Feedback Check My Wor via the definisi included in factory over for the common festimated to factory overcos Date: Dec. 10 Materials Requisition Reg. No. 12255 Job No. 03 Description Qty. Issued Unit Price Yarn type 600 skens $5 Amount $3,000 Oreck My Work Materials Requisition Date: Dec. 10 Reg. No. 12255 Job No. 83 Description Qty. Issued Unit Price Amount Yamn type B 600 skeins $5 $3,000 Total issued $3,000 Time Ticket No. 1255 Name: Susan Blake Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 65 $15 $975 12/16-12/31 83 103 15 1,545 Total Cost $2,520 Time Ticket No. 2274 Name: Josh Porter Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 75 $15 $1,125 12/16-12/31 83 88 15 1,320 Total Cost $2,445 Time Ticket No. 3923 Name: Mary Jones Work Description: Knitting/piecing Dates Job No. Hours Worked Unit Price Amount Check My Work Name Time Ticket No. 3923 Mary Jones Work Description Knitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 60 $15 3900 12/16-12/31 109 15 1,635 Total cost $2.535 Job Cost Sheets on December 10, POGP Company receves an order for 200 sweater vests and assign Job 3 to the order. Review the Materaction table to as the materials to the Job Cort Sheet for Job 3 On December 15, review the Time Tout tables to add the appropriate amount of Greator and factory overhead costs to the Job Cont Sheet for Job 62 for the period December 1 through December 15 on December 31, the last work day at the year for the betters, review Time Ticket table to use the appropriate amount of Grect labor and factory overhead couts to the Job Com sheet for Job 3 for the price December 16 through December 31 If there is no amount or an amount is zero, enter o". It required, round your answers to the nearest cont Job 62 100 units Sweaters Direct Materials Direct Labor Factory Overhead Total Balance Deli $5,000 $300 $104 3,000 5.000 3.300 Dec. 15 Total Coat Unit Cost Job 83 300 units Sweater veste Direct Materials Direct Laber Factory Overhead Total Job Cost 50 10 50 10 sance Dec. 1 Ched: My Work Job 83 200 Sweater vests Direct Materials Direct Labor Factory Overhead Total Job Cost 50 50 50 30 Balance Dec. 1 Dec. 10 Dec 31 Total Cost Feedback Check My Work Journal on December 10, POCP Company receives an order for 200 sweater verts and go to the ender. Review the materials Reguen toile to journalize the entry to record the addition of the material to Work in process. If an amount box does not require an entry, we i bank Det 10 Che McW On December 15, review the Tune Toket tables to journaise the entry to record the son of direct obor to work in process for the period December I though December 15, an ancoot bor does not rebuire on entry, have blank D.15 88 Ow My Work On December 15, review the Time Ticket tables to youmalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15. It an amount box does not require an entry, leave blank Dec. 15 88 Feedback Check My Work On December 21, Jon 62 is completed. Review the Job Cost Sheets and your journal entries Journal the entry to move the associated costs to the finished goods account. If an amount box does not require an entry, leave it blank Dec. 21 :88 Feedback - Mc Work On December 22, 75 of the 100 sweaters from 30 62 we sold on account for $125 each Journaise the following transactions The entry to record the sale. The entry to record the tranuter of costs from Finished Goods to cost of Goods Sold If an amount box does not require an entry leave it bank Dec. 22 Dec 22 Check My Work incorrect On December 31, the last work day of the year for the knitters, review the Time Ticket tables to ournalize the entry to record the addition of direct labor to work in Process for the period December 16 through December 31st an amount bon does not require an entry. Mave it blank Dec 31 Check My Work On December 31, the last work day of the yew for the writers, review the one table to youmalize the entry to record the adoon of factory overhead to Work in Process for the period December 16 through December 11. f an amount box does not require an entry, att blank Dec 31 Feedbaca ... We On December 31. Journal the following transactions. Note that expenses co., and (0) were in cash a. One mont's depreciation on quant One mo's are for employees One's rent of 12.000 d. Ons month's factory is $1235 Check My Work On December 31, prepare the journal entry to dispose of the balance in the factory overhead account. If an amount box does not require an entry leave it blank Dec. 31 ID Feedback Check My Wors Final Question What are the balances in the following accounts as of December 317 If an arvont is zero, enter" Materials Work in Process Finished Goods Factory Overhead Cost of Goods Sold Feedback Check My W Ceccone posting both 30 Theol. Then you are on the account Cho My Won Parally