15 May WHAT PRICE PER UNIT WOULD HAVE BEEN CHARGED TO THE CUSTOMER?
Assignment – Job Order Costing
Northwest Company uses a job-order costing system and applies manufacturing overhead cost to jobs
on the basis of the cost of direct materials used in production. At the beginning of the current year, the
following estimates were made for the purpose of computing the pre-determined overhead rate:
•
•
Budgeted manufacturing overhead cost was expected to be $620,000
Budgeted direct material cost for the year was expected to be $387,500
The following transactions took place during the year:
1.
2.
3.
4.
Raw material purchases totaled $355,000.
Raw materials requisitioned for use in production (all direct materials) totaled $375,000.
Utility costs incurred in the manufacturing plant were $52,500.
Costs for salaries and wages were incurred as follows:
Direct labour
Indirect labour
Selling and Administrative salaries
$540,000
$225,000
$362,500
5. Maintenance costs incurred in the manufacturing plant were $37,500.
6. Advertising costs for the year totaled $325,000.
7. The company recorded depreciation of $125,000 for the year. 90% of the depreciation relates
to manufacturing equipment.
8. The company paid $230,000 in rent for their facilities. The manufacturing plant used
approximately 80% of the space in the facility.
9. Manufacturing overhead was applied to jobs during the year.
10. The cost of goods manufactured for the year was $1,475,000.
11. Sales for the year totaled $2,500,000. The unadjusted cost of goods sold for these jobs was
$1,500,000.
12. Miscellaneous selling and administrative costs were $70,000 for the year.
13. The balances in the inventory accounts at the beginning of the year were as follows:
Raw materials
Work-in-process
Finished goods
$43,000
$62,000
$85,500
Required:
1. Determine the ending balances in the inventory accounts and in the Manufacturing Overhead
account.
2. Prepare a schedule of cost of goods manufactured.
3. The company has decided to write off the difference between the allocated overhead and the
actual overhead to cost of goods sold. Prepare a cost of goods sold schedule (i.e., show, in
detail, how you have calculated the cost of goods sold).
4. Prepare an income statement for the year.
5. Job 436 was one of many jobs started and completed during the year. The job required $9,000
in direct materials, and 500 hours of labour at a cost of $22 per hour. If the job contained 500
units and the company billed at 75% above the unit product cost on the job cost sheet, What
price per unit would have been charged to the customer?
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