Question

In: Accounting

Tata Motors produces trucks for commercial use. The company uses a normal job-order costing system to...

Tata Motors produces trucks for commercial use. The company uses a normal job-order
costing system to calculate its cost of goods manufactured. On January 01, 2019, there was only one job
in process with the following costs:

Job A-1
Direct materials $ 5,000
Direct labour 15,000
Applied overhead 19,500
Total $39,000

The following balances were taken from the general ledger of the company as of January 1, 2019:
Direct materials inventory $35,000
Finished goods inventory (for Job D-1) $65,000
During the year 2016, the following events occurred:
Direct materials were purchased on account for $275,000
Two more jobs were started: Job B-1 and Job C-1.
Direct materials and direct labour costs incurred by each job in process during the year 2019 are as follows:

Job A-1 Job B-1 Job C-1
Direct Materials $150,000 $30,000 $10,000
Direct Labour $150,000 $35,000 $15,000
The company incurred the following actual factory overhead during the year:
Factory rent $120,000
Factory supplies $ 45,500
Indirect labour $ 75,750
Jobs A-1 and B-1 were completed, and Jobs D-1 and A-1 were sold.
a. Calculate the total applied overhead for the year 2019 if the factory overhead costs are applied to
each job on the basis of direct labour dollars. [2 Marks]
b. Determine whether overhead is over-applied or under-applied. By how much? [2 Marks]
c. Prepare simple job order cost sheets for jobs A-1, B-1, and C-1. [3 Marks]
d. Prepare a schedule of cost of goods sold, identifying both normal and adjusted cost of goods sold, for
the year ended December 31, 2019. [6 Marks]

Solutions

Expert Solution

(a)

The factory overheads is apportioned to each job on the basis of Direct labour.

In Jan 2019, only one Job is in process - Job A 1

Total Cost of Job A 1 iin Jan 2019 is $ 39,500

The accumulated Materials as on 1 Jan 2019 = $ 35,000

FG Stock of Job D 1 = $ 65,000

Fresh Jobs Started in the year 2019 are Job B1 & Job C1

Direct Material Incurred for the Jobs in Progress are as below:-

Direct Material Direct Labour

Job A1 - $ 1,50,000 $ 1,50,000

Job B1 - $ 30,000 $ 35,000

Job C1 - $ 10,000 $ 15,000

Total Overheads Incurred by the company during the year = $ 120000+45500+75750

= $ 2,41,250

Overheads Applied to jobs done during 2019 are as below:-

Job A1 - 241250 (150000/200000)

= $ 180938

Overhead appoertined to Job A1 in Jan 2019 = $ 19,500

Job B1 = 241250 (35000/200000)

= $ 42219

Job C1 = 241250 (15000/200000)

= $ 18,094

(B) Determining whether Over head is Over applied or Under Applied

The Over head is over applied by $ 19500 to Job A1

(D) Schedule of Cost of goods sold for Year ended Dec 31 2019

Sold Jobs are Job A1 & Job D 1

Normal Cost of Job A1 = $ 4,80,938

Adjusted Cost of Job A1 = $ 5,00,438

Direct Material Stock as on Dec 31 2019 is as below:-

Cost of Job D 1 = $ 65,000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

: Tata Motors produces trucks for commercial use. The company uses a normal job-order costing system...

: Tata Motors produces trucks for commercial use. The company uses a normal job-order costing system to calculate its cost of goods manufactured. On January 01, 2019, there was only one job in process with the following costs: Direct materials Direct labour Applied overhead Total Job A-1 $ 5,000 15,000 18,000 $38,000 The following balances were taken from the general ledger of the company as of January 1, 2019: Direct materials inventory $35,000 Finished goods inventory (for Job D-1) $65,000...

Question 2: Tata Motors produces trucks for commercial use. The company uses a normal job-order costing...

Question 2: Tata Motors produces trucks for commercial use. The company uses a normal job-order costing system to calculate its cost of goods manufactured. On January 01, 2019, there was only one job in process with the following costs: Direct materials Direct labour Applied overhead Total Job A-1 $ 5,000 15,000 18,000 $38,000 The following balances were taken from the general ledger of the company as of January 1, 2019: Direct materials inventory $35,000 Finished goods inventory (for Job D-1)...

Bronco Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers....

Bronco Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers. The beginning balances (December 1) and ending balances (as of December 30) in their inventory accounts are as follows: Beginning Balance 12/1 Ending Balance 12/30 Material Control $ 1,500 $ 7,900 Work-in-process control 6,100 8,400 Manufacturing Department Overhead Control -- 97,500 Finished Goods Control 3,800 18,800 Additional information follows: a. Direct materials purchased during December were $65,700. b. Cost of goods manufactured for December...

Bramble Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers....

Bramble Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers. The beginning balances (December 1) and ending balances (as of December 30) in their inventory accounts are as follows: Beginning Balance 12/1 Ending Balance 12/30 Material Control $ 1,800 $ 8,200 Work-in-process control 6,400 8,700 Manufacturing Department Overhead Control -- 92,500 Finished Goods Control 4,100 19,100 Additional information follows: a. Direct materials purchased during December were $66,000. b. Cost of goods manufactured for December...

Lin Corporation uses a job order costing system and normal costing, with overhead being applied on...

Lin Corporation uses a job order costing system and normal costing, with overhead being applied on the basis of direct labor cost. There were no jobs in process at the start of the period. During the month, the company worked on 3 jobs, with the following information: Alpha Beta Gamma Direct Labor ($8/hour) $24,000 $8,800 Direct Materials $42,000 $61,000 Overhead Applied $23,940 $6,160 During the month, only job Alpha was completed and transferred to finished goods inventroy. The ending balance...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,980,000 of factory overhead costs and use 66,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 180,000 pounds of materials on account; the cost was $5.00 per pound. Issued 120,000 pounds of materials to production, of which 15,000 pounds were used...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,680,000 of factory overhead costs and use 60,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 182,000 pounds of materials on account; the cost was $5.10 per pound. Issued 121,000 pounds of materials to production, of which 15,500 pounds were used...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,860,000 of factory overhead costs and use 60,000 machine hours. Erkens Company recorded the following events during the month of April: a. Purchased 214,000 pounds of materials on account; the cost was $5.10 per pound. b. Issued 137,000 pounds of materials to production, of which 23,500 pounds...

Arensky Company uses normal costing to account for overhead in its job costing system. There are...

Arensky Company uses normal costing to account for overhead in its job costing system. There are 2 departments in the company: Designing and Machining. The Designing Dept. is labor intensive; the Machining Dept. is machine intensive. (OH= Overhead; DLH= Direct Labor Hours; MH= Machine Hours.) The budget for 2019 is as follows: Designing Machining Est. OH $2,000,000 $5,600,000 Est DLH 40,000 Hours 10,000 Hours Est MH. 20,000 Hours 70,000 Hours Actual Results are as follows: Designing Machining Actual OH $2,100,000...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the...

Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $2,553,000 of factory overhead costs and use 69,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 200,000 pounds of materials on account; the cost was $6.00 per pound. Issued 130,000 pounds of materials to production, of which 20,000 pounds were used...

Subjects