Job Order Costing
Job Order Costing
Job Order Costing
Problem 1:
ABC Co. uses a job order costing system, and the following information is available from its records:
The company has three jobs in process: Job #101, #102, and #103. Direct materials were requisitioned for each job
as follows: 30%, 25%, and 25%, respectively, the balance of the requisitions was considered indirect. Direct labor
hours per job are 2,500, 3,100, and 4,200, respectively. Indirect labor is P33,000. Other actual overhead costs totaled
P36,000.
Problem 2:
Bong Soon Inc. produces product “PhoneI 20 ProMax”. For 2024, Bong Soon
Inc. estimated the following:
Overhead costs (excluding spoilage) P1,200,000
Estimated spoilage cost 100,000
Estimated sales value of spoiled materials 40,000
Estimated direct labor hours 40,000
The cost of a unit of product “PhoneI 20 ProMax” is P80. During the current period, 150 units of product “PhoneI 20
ProMax” are considered spoiled. Spoiled unit of product “PhoneI 20 ProMax” can be sold for P64 each.
1. What is the predetermined OH rate per direct labor hour of the spoilage if it is inherent in
production?
2. What is the predetermined OH rate per direct labor hour of the spoilage if it relates only to a
specific job?
Problem 3:
Kaijun Company’s has Job #143 for the manufacture of 4,400 coats, which was completed in October at unit costs
presented as follows:
Final inspection of Job #143 disclosed 400 spoiled coats which were sold to a jobber for P12,000.
Inspection of Job #001 disclosed that 10 units are defective. All the 10 defective units were reworked and incurred the
following direct costs:
Direct materials P200
Direct labor 320
P520
Scenario 2: The rework costs were attributable to exacting specifications of Job #001.
1. How many units are deemed as good units?
2. What amount of rework cost is to be debited to WIP inventory account?
3. What would be the new unit cost of Job #001?