Quiz 4: Part 1 Job Order Costing and Part 2 Budgeting

Quiz 4

Part 1 Job Order Costing

Quiz 4

John and Sam went to college together, and both majored in computer science. A few years ago, they formed a computer company called Synergy, Inc. Synergy Inc. is a manufacturer of enterprise management systems. Assume that the company has a division that does custom jobs for large clients. Production costs are accounted for using a job cost system. Suppose that at the beginning of the month, raw materials inventory totaled $9,000, manufacturing supplies amounted to $2,800, and two jobs were in process Job 455 with assigned costs of $14,750 and Job 456 with assigned costs of $4,800, and there were no finished goods inventories. There was no under-applied or over-applied manufacturing overhead on the first day of the month.

Synergy purchased raw material costing $60,000 on account. Synergy purchased manufacturing supplies costing $10,000. The manager process requisitioned materials for the various jobs in process. The requisitioned material needed to complete Job 456 was $3,200. Synergy started two new jobs and assigned those numbers 457 and 458. The requisitioned direct materials for 457 was $16,000, and 458 was $13,500.

Direct labor costs for the month were incurred at a rate of $15.00 per hour. Job 455 needed 700 hours. Job 456 needed 1,650 hours. Job 457 needed 2,000 hours. Job 458 needed 960 hours.

Manufacturing supplies used for the month totaled $7,500. Synergy recognized depreciation on factory assets of $6,000. The company incurred miscellaneous manufacturing overhead cost of $20,750 on account. The company applied manufacturing overhead at a rate of $7.00 per direct labor hour. The following jobs were completed in the month: Jobs 455, 456, and 457. The following jobs were delivered to customers: Jobs 455 and 456.

Prepare in good form a ledger or T account showing the flow of costs through the Work-in-Process, Finished Goods, and Costs of Goods Sold accounts.

Show the job costs details for each job to support the balances in Work-in-Process, Finished Goods, and Costs of Goods Sold accounts.

Is Manufacturing Overhead over or under applied? What is the journal entry to close Manufacturing Overhead account?

Prepare in good form a Statement of Costs of Goods Manufactured for the month.

Josiah is a golf enthusiast. He teaches and plays the game of golf. A few years back, he was able to get in on an excellent business opportunity. He is a part of Improve Your Golf, Inc. They sell two different products that help people improve their golf game. The company needs your help in budgeting.

Here is some information available for the month of April

Estimated sales

Product 1 sales for this month are estimated to be 180,000 units at $12.00 each. Product 2 sales for this month are estimated to be 250,000 units at $6.00 each.

Estimated Costs

Product 1 estimated costs are $6 per unit. Product 2 estimated costs are $3.00 per unit

Desired inventories

Product 1- the beginning inventory is 11,000, and the ending inventory is 8,000. Product 2 –the beginning inventory is 5,000, and the ending inventory is 6,000.

Other information you will need:

The company has their bank accounts at Sun Bank. The beginning cash balance is $500,000 on the first of the month. Sales are on credit and are collected 80% in the current period and the balance in the next period. March sales were $3,200,000, and May sales are estimated to be 3,400,000. Bad debts average 2% of sales. The company purchases most of the golf merchandise that it distributes. Purchases of merchandise are paid 70% in the month of purchase and 30% in the following month. Purchases totaled 1,900,000 in March and are estimated to be 2,000,000 in May. The company has several employees. Employee wages are paid in the current month. Employee expenses for April were $515,000. Overhead expenses are paid in the next month. The accounts payable amount for these expenses from March is $90,000, and for May will be $100,000. April’s overhead expenses are $90,000. Selling and administrative expenses are paid monthly and total $780,000, including $50,000 of depreciation.

All unit costs for April are the same as they were in March.