SZABIST

Karachi February 26, 2019

Assignment # 2
Cost Accounting (AF 2302)
BSAF-3A
Ms. Riffat Mughal

Submission Date: March 6, 2019 Total Marks: 2.5

Objective of the Assignment: To enhance their knowledge related to Job Order accounting system.
Learning Outcomes: Students must demonstrate understanding of the basic cost concepts and must be able
to solve the questions related to job order accounting system and understand the cost flow.

Assignment Details: Please submit hand written assignment of Cost Accounting. You should
solve all the three questions in A4 paper. Please also provide your name, registration number, and
class in the assignment.

Q1) Foley Company uses a job-order costing system. The following data relate to the month of
October, the first month of the company’s fiscal year:
a. Raw materials purchased on account, $210,000.
b. Raw materials issued to production, $190,000 (80% direct and 20% indirect).
c. Direct labor cost incurred, $49,000; and indirect labor cost incurred, $21,000.
d. Depreciation recorded on factory equipment, $105,000.
e. Other manufacturing overhead costs incurred during October, $130,000 (credit Accounts
Payable).
f. The company applies manufacturing overhead cost to production on the basis of $4 per machine-
hour. A total of 75,000 machine-hours were recorded for October.
g. Production orders costing $510,000 according to their job cost sheets were completed during
October and transferred to Finished Goods.
h. Production orders that had cost $450,000 to complete according to their job cost sheets were
shipped to customers during the month. These goods were sold on account at 50% above cost.
Required:
1. Prepare journal entries to record the information given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant
information above to each account. Compute the ending balance in each account, assuming that
Work in Process has a beginning balance of $35,000.

Q2) Kody Corporation uses a job-order costing system with a plant wide overhead rate based on
Machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production . . . . . . . . . . . . 150,000
Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $750,000
Variable manufacturing overhead cost per machine-hour . . . . . . . . . . . . $4.00
Required:
 SZABIST
Karachi February 26, 2019
1. Compute the predetermined overhead rate.
2. During the year Job 500 was started and completed. The following information was available
with respect to this job:
Direct materials requisitioned . . . . . . . . . . . . . . . . . $350
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . .. $230
Machine-hours used. . . . . . . . . . . . . . . . . . . . . . . . …30
Compute the total manufacturing cost assigned to Job 500.
3. During the year the company worked a total of 147,000 machine-hours on all jobs and incurred
actual manufacturing overhead costs of $1,325,000. What the amount is of under applied or over
applied overhead for the year? If this amount were closed out entirely to Cost of Goods Sold,
would the journal entry increase or decrease net operating income?

Plagiarism Policy. The assignment shall be put to plagiarism check. The maximum similarity is below
19% for the whole assignment and less than 5% from a signal source. The plagiarism report shall be attached
with the assignment at the time of submission.

Please use A4 page for the assignment. Students must submit handwritten assignment in Lecture
6 i.e. March 6, 2019.

Note: Please use both sides of the paper and avoid unnecessary printing.