Entries for Costs in a Job Order Cost System

Velasco Co. uses a job order cost system. The following data summarize the operations related to production for July:

1. Materials purchased on account, $695,900
2. Materials requisitioned, $584,560, of which $75,990 was for general factory use
3. Factory labor used, $716,780, of which $136,190 was indirect
4. Other costs incurred on account for factory overhead, $167,020; selling expenses, $257,480; and administrative expenses, $153,100
5. Prepaid expenses expired for factory overhead, $32,010; for selling expenses, $27,140; and for administrative expenses, $19,490
6. Depreciation of office building was $93,250; of office equipment, $47,320; and of factory equipment, $32,010
7. Factory overhead costs applied to jobs, $396,660
8. Jobs completed, $918,590
9. Cost of goods sold, $890,750

Required:

Journalize the entries to record the summarized operations. If an amount box does not require an entry, leave it blank.

a. Materials purchased on account, $695,900.

b. Materials requisitioned, $584,560, of which $75,990 was for general factory use.

c. Factory labor used, $716,780, of which $136,190 was indirect.

d. Other costs incurred on account for factory overhead, $167,020; selling expenses, $257,480; and administrative expenses, $153,100.

e. Prepaid expenses expired for factory overhead, $32,010; for selling expenses, $27,140; and for administrative expenses, $19,490.

f. Depreciation of office building was $93,250; of office equipment, $47,320; and of factory equipment, $32,010.

g. Factory overhead costs applied to jobs, $396,660.

h. Jobs completed, $918,590.

i. Cost of goods sold, $890,750.

1.    Gideon currently has a fixed annual cost of $800,000, variable cost of $20 per unit, and a selling price of $50 per unit. What is Gideon’s current breakeven point?

2.    Continuing from the prior problem, Gideon is studying the possibility of expanding with a new factory because demand for their product is more than they can service in the old factory. If they proceed with this plan their annual fixed costs will increase to $1,500,000. Their variable cost per unit and selling price per unit will stay the same. What is Gideon’s new breakeven point with the new factory?

3.    Instead of expanding into the new plant, what are some other alternatives Gideon could use to meet this increased demand. Mention at least one alternative and talk about a strength of this alternative and a weakness of this alternative.

4.    Dexter Corporation projects the following units and selling prices:

                           Year 1              Year 2              Year 3              Year 4

Unit sales                                  1,000              1,500              2,000                3,000

Selling price per unit                      $10                   $12                   $15                   $18

Please calculate Dexter’s projected or proforma sales.

5.    Continuing from the prior problem, Dexter has the following fixed cost per year and variable cost per unit each year:

                                                Year 1              Year 2              Year 3              Year 4

Annual fixed costs                    $2,000              $2,100              $2,200              $2,400

Variable costs per unit                    $5                     $6                   $8                     $9

Assuming these are all the costs for Dexter. Please calculate Dexter’s projected or proforma profit.

Classifying Cost Behavior
For each of the graphs displayed below, select the most appropriate cost behavior pattern where the lines represent the cost behavior pattern, the vertical axis represents total costs, the horizontal axis represents total volume, and the dots represent actual costs. Each pattern may be used more than once.

Using the drop-down box next to each cost description below, select the number to the graph that best depicts the cost behavior pattern.

Suppose Zume's sales price is 19, variable cost per unit is 8, and fixed cost is 416. Zume sells 1500 pizzas. What is Zume’s Margin of Safety in sales dollars? (HINT: Use Contribution Margin Ratio). (Round ONLY you final answer to 2 digits...keep at least 3 digits on CM ratio during calculations )

Why do accountants normally calculate cost per unit as an average?

Determining the exact cost of a product is virtually impossible.

Some manufacturing-related costs cannot be accurately traced to specific units of product.

Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used.

All of these are justifications for computing average unit costs.

Please explain the difference between job cost and process cost systems in one to two paragraphs.

Given:

Treatment E: Cost = $5,000, benefit = survival rate of 60%

Treatment F: Cost = $7,000, benefit = survival rate of 50%

Treatment G: Cost = $4,000, benefit = survival rate of 40%

Treatment H: Cost =$5,000, benefit = survival rate of 30%

Treatment K: Cost =$3,000, benefit = survival rate of 55%

Treatment J: Cost = $6,000, benefit = survival rate of 68%

1.

What are the ICERS of

K to E?

K to J?

$272.73; $23,076.92

$40,000; $4,000

$23,076.92; $40,000

$4,000; $23,076.92

$40,000; $23,076.92

2.

From K which treatment do we choose next?

E

J

H

G

none of the above

1. A job cost sheet of Vaughn Company is given below.

Answer the following questions.

(a) What are the source documents for direct materials, direct labor, and manufacturing overhead costs assigned to this job?

(b) What is the predetermined manufacturing overhead rate? (Round answer to 0 decimal places, e.g 135.)

(c) What are the total cost and the unit cost of the completed job? (Round unit cost to 2 decimal places, e.g. 1.25.)

2. Kevin Hall and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November.

Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $54 per auditor hour. The Wildhorse Inc. job is the only incomplete job at the end of November. Actual overhead for the month was $12,100.

(a) Determine the cost of each job.

(b) Indicate the balance of the Service Contracts in Process account at the end of November.

(c) Calculate the ending balance of the Operating Overhead account for November.

Calculation of Cost of Goods Sold: Periodic Inventory System Prepare the cost of goods sold section for Adams Gift Shop. The following amounts are known: Beginning merchandise inventory $27,050 Ending merchandise inventory 22,550 Purchases 77,125 Purchases returns and allowances 4,055 Purchases discounts 5,745 Freight-in 230 Adams Gift Shop Cost of Goods Sold Cost of goods sold: $ $ $ $ $ Cost of goods sold $

Cost behavior. VW has determined the following cost information at a volume of 16,000 units: Total variable expenses = $108,000 and average cost = $13.00. Assuming 40,000 units is within the relevant, compute TOTAL cost at a volume of 40,000 units.