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Cost and Profit Analysis of a Company

Question

GIVEN: Example Manufacturing Company uses a job order costing system. The following information summarizes its operations related to production for January, its first month of operations.

A.  Purchased production materials on account, $85,000.

B.  Production materials of $90,000 were requisitioned to the factory for the five jobs started in January and for general factory use as follows:

Job

Materials

Job No. 1001

 $15,000

Job No. 1002

   14,000

Job No. 1003

   11,800

Job No. 1004

   20,200

Job No. 1005

    22,000

General factory use

      7,000

 

 $90,000

 

C.  Factory labor costs of $71,000 were incurred.  The employee time tickets provided the following:

Job

Factory Labor

Job No. 1001

 $   10,000

Job No. 1002

    11,750

Job No. 1003

      10,250

Job No. 1004

    14,800

Job No. 1005

    18,200

General factory use

     6,000

 

 $71,000

D.  Factory overhead is allocated to jobs at a rate of $50 per machine hour.  Machine hours used were:

 

Job

Machine Hours

Job No. 1001       

105

Job No. 1002

110

Job No. 1003

95

Job No. 1004

150

Job No. 1005

120

 

580

E.  Depreciation on the factory machinery and equipment was $6,500.

F.  Factory overhead costs incurred on account were $9,800.

G.  Jobs 1001, 1002 and 1004 were completed.

H.  Jobs 1001 and 1002 were shipped and the customers were billed $100,000 for job 1001 and $111,000 for job 1002.

REQUIRED:

Part 1:  Prepare a schedule summarizing manufacturing costs by job incurred in January.  Use the following columns and provide column totals.

                  Job          Direct Materials           Direct Labor               Factory Overhead          Total 

Part 2:   What are the January 31 balances for each of the following accounts?  Support your answers by indicating the jobs in that balance.

        Work in Process Inventory

        Finished Goods Inventory

        Cost of Goods Sold

Part 3:   What was cost of goods manufactured for January?  (Show supporting work.)

Part 4:   What was gross profit for January?  (Show supporting work.)

Part 5:   Prepare summary journal entries for information a through h given above. 

Summary

This question belongs to accounting and discusses about summarizing manufacturing costs, journal entries, inventory, cost of goods sold and profit of a company based on the given data.

Total word count: 166

 

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