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 |
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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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Accounting Equation |
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Journal Entries in Nepali |
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Journal Entries |
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Journal Entry and Ledger |
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Ledger |
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Subsidiary Book |
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Cashbook |
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Trial Balance and Adjusted Trial Balance |
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Bank Reconciliation Statement (BRS) |
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Depreciation |
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Financial Accounting and Analysis (All videos) |
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Accounting Process |
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Accounting for Long Lived Assets |
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Analysis of Financial Statement |
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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 |
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Date: 1st January 2021 |
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Customer: Max Suppliers |
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Products: Printed coffee mug |
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No. of units: 2,000 |
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Materials: |
Department A requisition No. 1 |
$20,000 |
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Department B requisition No. 2 |
$15,000 |
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Department C requisition No. 3 |
$5,000 |
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Wages: |
Department A 60 hours @ $30 per hour |
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Department B 40 hours @ $20 per hour |
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Department C 20 hours @ $50 per hour |
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Indirect expenses: |
Department A 50 hours @ $100 |
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Department B 150 hours @ $20 |
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Department C 50 hours @ $40 |
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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 |
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LS Ceramic Company |
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Job/production orders No; 153 |
Customer: Max Suppliers |
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Name of materials: Printed coffee mug |
Quantity: 2,000 pieces |
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Date commenced: 1st January 2021 |
Date completed: 7th January 2021 |
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Materials |
Labour |
Overhead |
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Date |
Dept |
Req. |
Amount |
Date |
Dept |
Time |
Amount |
Date |
Dept |
Rate |
Amount |
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No. |
Units x Rate |
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taken |
Units x Rate |
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Units x Rate |
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1 Jan |
A |
1 |
20,000 |
1 Jan |
A |
60 |
1,800 |
1 Jan |
A |
100 |
5,000 |
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3 Jan |
B |
2 |
15,000 |
3 Jan |
B |
40 |
800 |
3 Jan |
B |
20 |
3,000 |
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5 Jan |
C |
3 |
5,000 |
5 Jan |
C |
20 |
1,000 |
5 Jan |
C |
40 |
2,000 |
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Total |
40,000 |
|
3,600 |
|
10,000 |
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Summary |
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Particulars |
Estimated cost $ |
Actual cost $ |
Different in $ |
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Materials |
40,000 |
40,000 |
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Labour |
3,600 |
3,600 |
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Overhead [variable] |
10,000 |
10,000 |
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Overhead [fixed] |
4,000 |
4,000 |
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Profit |
14,400* |
14,400 |
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Total |
$72,000 |
$72,000 |
Nil |
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Given and working note:
Total cost |
= materials + labour + variable cost + fixed cost |
Profit |
= 57,600 @ 25% |
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= 40,000 + 3,600 + 10,000 + 4,000 |
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= 14,400* |
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= 57600 |
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Job Order Costing
Job No. 153
Particulars |
Amount |
Amount |
|
Direct materials |
|
40,000 |
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Wages: |
Department A 60 hours @ $30 per hour |
1,800 |
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Department B 40 hours @ $20 per hour |
800 |
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Department C 20 hours @ $50 per hour |
1,000 |
3,600 |
Prime cost |
|
43,600 |
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Add: Indirect expenses: |
Department A 50 hours @ $100 |
5,000 |
|
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Department B 150 hours @ $20 |
3,000 |
|
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Department C 50 hours @ $40 |
2,000 |
10,000 |
Add: Fixed cost |
|
4,000 |
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Total cost |
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57,600 |
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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) |
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Binding materials @ 25% of paper |
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Labour: |
Printing 10 paisa ($0.10) per paper |
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Binding @ 50% of printing |
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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 |
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= 100,000 papers |
Cost for 1 sheet |
= $260 ÷ 500 paper |
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= $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 |
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|
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 |
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Date: |
1st January 2011 |
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Customer: |
MWA Group |
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Products: |
Office shoes |
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No. of units: |
2,500 |
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Materials: |
A 3 kg @ $40; |
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B 2 kg @ $30; |
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C 1 kg @ $50 |
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Direct labour |
2 DLH for one unit @ $30 per hour |
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Production cost |
5,000 DLH@ $35 per hour |
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Administrative overhead |
25% of work cost |
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Estimated profit |
40% of cost price |
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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: |
1st July 2021 |
Customer: |
Super Catering |
Products: |
Mixed pickles |
No. of units: |
1,000 kg |
Materials: |
Materials A 1,000 kg x $20 |
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Materials B 100 kg x $250 |
Direct wages: |
Department A 800 DLH x $20 |
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Department B 800 DLH x $30 |
Variable overhead: |
Department A 50 hours x $50 |
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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 |
Required: (a) Prime cost; (b) Work cost; (c) Total cost; (d) Sales
[Answer: PC = $108,000; WC = $128,000; TC = $192,000;
Profit = $48,000; Sales = $240,000]
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