Job Order Costing System
1. Describe when it is appropriate for a company to use a job-order costing system.
Answer
Job order cost system provides per unit cost of manufactured products. Job order cost system is used by the companies that manufacture custom products for customers or batches of similar products. Job order cost system is used in the companies that offer many different products or services to its customers. Example Industries where job order cost system is used are Furniture manufacturing, Apparel manufacturing, commercial aircraft manufacturing, hospitals, and law firms.
2. Calculate the balance in CompuFurn, Inc.'s Work-in-Process Inventory account as of December 31. Solution Work In Process
Job No. CC723 CH291 PS812 DS444
Description Computer Cady Chair Printer Stand Desks Total Units Accumulated Cost Units Accu Cost Units Accu Cost Units Accu Cost Units Accu Cost
Balance at Nov 30 20,000 $ 900,000 15,000 $ 431,000 25,000 $ 250,000 - $ - 60,000 $ 1,581,000
Add: Raw Material in Dec 51,000 3,000 124,000 5000 65,000 $ 243,000
Add : Purchase Parts in Dec 104,000 10,800 87,000 187,000 $ 388,800
Add : Labor Cost in Dec 122,400 43,200 200,500 138,000 $ 504,100
Add: Indirect labor in Dec 8,120 2,520 10,010 8,750 $ 29,400
Add: Supervision in Dec 15,909 4,937 19,611 17,143 $ 57,600
Total Work in process 20,000 $ 1,201,429.00 15,000 $ 495,457 25,000 $ 691,121 5,000 $ 415,893
Answer
Job order cost system provides per unit cost of manufactured products. Job order cost system is used by the companies that manufacture custom products for customers or batches of similar products. Job order cost system is used in the companies that offer many different products or services to its customers. Example Industries where job order cost system is used are Furniture manufacturing, Apparel manufacturing, commercial aircraft manufacturing, hospitals, and law firms.
2. Calculate the balance in CompuFurn, Inc.'s Work-in-Process Inventory account as of December 31. Solution Work In Process
Job No. CC723 CH291 PS812 DS444
Description Computer Cady Chair Printer Stand Desks Total Units Accumulated Cost Units Accu Cost Units Accu Cost Units Accu Cost Units Accu Cost
Balance at Nov 30 20,000 $ 900,000 15,000 $ 431,000 25,000 $ 250,000 - $ - 60,000 $ 1,581,000
Add: Raw Material in Dec 51,000 3,000 124,000 5000 65,000 $ 243,000
Add : Purchase Parts in Dec 104,000 10,800 87,000 187,000 $ 388,800
Add : Labor Cost in Dec 122,400 43,200 200,500 138,000 $ 504,100
Add: Indirect labor in Dec 8,120 2,520 10,010 8,750 $ 29,400
Add: Supervision in Dec 15,909 4,937 19,611 17,143 $ 57,600
Total Work in process 20,000 $ 1,201,429.00 15,000 $ 495,457 25,000 $ 691,121 5,000 $ 415,893