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Job Order Costing | Job Cost Sheet | COGM | COGS | Problems and Solutions

Arjun EP

Published on: February 1, 2022

Job Order Costing

There are different types of manufacturing company.

Most of companies produce goods for their own sells.

Some companies produce goods for other company.

Nowadays most of national and multinational companies do not manufacture most of their branded goods themselves.

In job order costing, manufacturing companies supply manufactured goods to marketing companies.

Marketing companies are customers of manufacturing companies.

All marketing strategy is done by marketing company.

Manufacturing company only produces goods for marketing company.

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1A

J.K. Ties Company manufactures different kind of ties for school, college and offices. The company has received an order for 100 executive ties. Other data are (amount in $/₹/Rs):

Materials (silk cloth)	$3,500
Direct labour	$1,000
Other indirect expenses	$500
Fixed cost	$1,000

Required: (1) Total cost; (2) Profit is 40% on cost

[Answer: (1) $6,000; (2) $2,400]

SOLUTION

Job Order Costing

For 100 ties

Particulars	Amount
Direct materials	3,500
Direct labour	1,000
Prime cost	4,500
Add: Other indirect expenses	500
Work cost	5,000
Add: Fixed cost	1,000
Total cost	6,000
Add: Profit (6,000 @ 40%)	2,400
Sales	8,400

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1B

The extracted data is given below by LS Ceramic Company (amount in $/₹/Rs):

Job No. 153
Date: 1^st January 2021
Customer: Max Suppliers
Products: Printed coffee mug
No. of units: 2,000

Materials:	Department A requisition No. 1	$20,000
	Department B requisition No. 2	$15,000
	Department C requisition No. 3	$5,000

Wages:	Department A 60 hours @ $30 per hour
	Department B 40 hours @ $20 per hour
	Department C 20 hours @ $50 per hour

Indirect expenses:	Department A 50 hours @ $100
	Department B 150 hours @ $20
	Department C 50 hours @ $40

Fixed cost $4,000

Required: (1) Job cost sheet charging 25% profit on cost; (2) Job order costing if profit 25% on sales

[Answer: Total cost = $57,600; Profit = $14,400; Sales = $72,000]

SOLUTION:

Job Cost Sheet

LS Ceramic Company

Job/production orders No; 153

Customer: Max Suppliers

Name of materials: Printed coffee mug

Quantity: 2,000 pieces

Date commenced: 1st January 2021

Date completed: 7th January 2021

Materials

Labour

Overhead

Date

Dept

Req.

Amount

Date

Dept

Time

Amount

Date

Dept

Rate

Amount

No.

Units x Rate

taken

Units x Rate

1 Jan

20,000

1 Jan

1,800

1 Jan

100

5,000

3 Jan

15,000

3 Jan

800

3 Jan

3,000

5 Jan

5,000

5 Jan

1,000

5 Jan

2,000

Total

40,000

3,600

10,000

Summary

Particulars

Estimated cost $

Actual cost $

Different in $

Materials

40,000

Labour

3,600

Overhead [variable]

10,000

Overhead [fixed]

4,000

Profit

14,400*

14,400

Total

$72,000

Nil

Given and working note:

Total cost	= materials + labour + variable cost + fixed cost	Profit	= 57,600 @ 25%
	= 40,000 + 3,600 + 10,000 + 4,000		= 14,400*
	= 57600

Job Order Costing

Job No. 153

Particulars		Amount	Amount
Direct materials			40,000
Wages:	Department A 60 hours @ $30 per hour	1,800
	Department B 40 hours @ $20 per hour	800
	Department C 20 hours @ $50 per hour	1,000	3,600
Prime cost			43,600
Add: Indirect expenses:	Department A 50 hours @ $100	5,000
	Department B 150 hours @ $20	3,000
	Department C 50 hours @ $40	2,000	10,000
Add: Fixed cost			4,000
Total cost			57,600
Add: Profit (57,600 x 25/75)			19,200
Sales			76,800

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1C

Pushpanjali Copy Uddhyog has received an order of special register in A4 size paper for 1,000 pieces of 100 sheets. Other data are:

Materials:	Paper (1 ream is 500 sheets @ $260 per ream)
	Binding materials @ 25% of paper

Labour:	Printing 10 paisa ($0.10) per paper
	Binding @ 50% of printing

Overhead:	Cutting and finishing $2 per unit

Required: (1) Total cost for per unit and 1,000 units; (2) Profit per register if supplied at $100

[Answer: (a) $82 and $82,000; (b) $18]

SOLUTION:

Given and working note:

Paper cost	= 1,000 registers x 100 paper	Cost for 500 paper	= $260
	= 100,000 papers	Cost for 1 sheet	= $260 ÷ 500 paper
			= $0.52 or 52 cents

Job Order Costing

Job No. xxx

Particulars		1 unit	1,000 units
		100 sheets	100,000 sheets
Direct materials	(per sheets x $0.52)	52	52,000
Binding materials	(25% of paper)	13	13,000
Labour:	Printing (per sheets x $0.10)	10	10,000
	Binding (50% of printing)	5	5,000
Prime cost		80	80,000
Add: Overhead (cutting and finishing; unit x $2)		2	2,000
Total cost		$82	$82,000

Profit if supplied at $100 per register

= Selling price – Total cost per unit

= $100 – $82

= $18

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1D

The following information is available for batch No. 243/21 of CB Company Ltd:

	Department A	Department B	Department C
Materials consumed (in $)	400,000	100,000	150,000
Wage rate per hour (in $)	30	40	50
DLH (in hours)	300	200	400

Additional information:

a. Fixed production cost is $50 per DLH

b. Fixed administrative overhead 50% of work cost

c. Profit mark up 20% on selling price

Required: Total cost and sales price each department

[Answer: Total cost: A = $7,57,500; B = $2,85,000; C = $5,55,000;

Sales: A = $12,46,875; B = $3,56,250; C = $6,93,750]

SOLUTION

Job Order Costing

Job No. 243/21

Particulars	Departments			Total
	A	B	C
Materials consumed	4,00,000	1,00,000	1,50,000	6,50,000
Direct labour (DLH x $)	90,000	80,000	2,00,000	3,70,000
Prime cost	4,90,000	1,80,000	3,50,000	10,20,000
Production cost (DLH x $50)	15,000	10,000	20,000	45,000
Works cost	5,05,000	1,90,000	3,70,000	10,65,000
Administrative cost (50% of work cost)	2,52,500	95,000	1,85,000	5,32,500
Total cost	7,57,500	2,85,000	5,55,000	19,97,500
Profit (20% on sales = Total cost x 20/80)	1,89,375*	71,250	1,38,750	3,99,375
Selling price	12,46,875	3,56,250	6,93,750	23,96,875

Profit on sales

= Total cost x 20/80

= $757,500 x 20/80

= $189,375

#####

Problems and Answers of Job Order Costing

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1A

Shikher Shoes (P) Ltd has received a special order for office shoes. Other data is given below:

Job No.		155/2021
Date:		1^st January 2011
Customer:		MWA Group
Products:		Office shoes
No. of units:		2,500
Materials:		A 3 kg @ $40;
		B 2 kg @ $30;
		C 1 kg @ $50
Direct labour		2 DLH for one unit @ $30 per hour
Production cost		5,000 DLH@ $35 per hour
Administrative overhead	25% of work cost
Estimated profit	40% of cost price

Required: (a) Prime cost; (b) Work cost; (c) Total cost; (d) Sales

[Answer: PC = $725,000; WC = $900,000; TC = $11,25,000;

Profit = $450,000; Sales = $15,75,000]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1B

HK Food Products manufactures pickles and sauces and pickles. The company has received order for 1,000 kg mixed pickles. Other data are:

Job No.	025 B/2021
Date:	1^st July 2021
Customer:	Super Catering
Products:	Mixed pickles
No. of units:	1,000 kg
Materials:	Materials A 1,000 kg x $20
	Materials B 100 kg x $250
Direct wages:	Department A 800 DLH x $20
	Department B 800 DLH x $30
Variable overhead:	Department A 50 hours x $50
	Department B 30 hours x $60
Fixed cost	$15,000

Required: Job cost sheet charging 30% profit on cost

[Answer: Total cost = $104,300; Profit = $31,290; Sales = $135,590;

* Materials = $45,000; Wages = $40,000; Variable cost = $4,300]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country

PROBLEM: 1C

The following information is available for batch No. 013/21 of Lata Manufacturing Company:

Job order for	1,000 units
Materials	2 kg per unit @ $30
Direct labour	80% of materials
Production cost	1,000 DLH@ $20 per hour
Administrative overhead	50% of work cost
Estimated profit	20% of sales price