What is the first step in the job order costing process?
The receipt of a sales order from a customer
What is a job-cost sheet?
Document prepared for each job that accumulates the costs of that job
Journal entry to record acquisition of raw materials from suppliers
Dr. Raw Materials Inventory
Cr. A/P
What is a materials requisition form?
Document that requests DM to be pulled from the warehouse and sent to the production line
Journal entry to record:
1.) DM used for a job
2.) DL worked on a job
1.)
Dr. WIP - Job ##
Cr. Raw Materials Inventory
2.)
Dr. WIP - Job ##
Cr. Wages Payable
When actual manufacturing overhead costs are incurred, how is WIP affected?
WIP is not affected
Which account is debited when actual manufacturing overhead costs are incurred?
Manufacturing Overhead Control
Formula for MOH Application Rate
Estimated Total MOH (in $) / Estimated Total Quantity of Allocation Base
Formula for MOH Applied
Total Actual Quantity of Allocation Based * Predetermined Application Rate
Journal entry for MOH applied
Dr. WIP - Job ##
Cr. Manufacturing Overhead Applied
If the difference between MOH applied and MOH control is a credit, overhead was________ (under/over applied). If the difference was a debit, overhead was ______ (under/over applied).
- Credit: overapplied
- Debit: underapplied
How are differences between MOH applied and actual MOH treated if the difference is (1) immaterial or (2) material?
- Immaterial: closed directly to COGS
- Material: prorated between WIP, FG, and COGS
How is normal spoilage treated when it (1) is worthless and cannot be sold or (2) it can be sold? Any necessary journal entries?
- Worthless: included in the cost of the WIP account of the job that created it; ultimately becomes a part of COGS of the good units produced; no journal entry
- Can be sold: journal entry made to debit Spoiled Inventory (for FMV) and credit WIP
Journal Entry for Abnormal Spoilage if
(1) the abnormal spoilage is worthless and cannot be sold
(2) the abnormal spoilage can be sold
1.)
Dr. Loss from Abnormal Spoilage
Cr. WIP - Job ##
2.)
Dr. Spoiled Inventory (FMV)
Dr. Loss from Abnormal Spoilage (difference)
Cr. WIP - Job ##
How does abnormal spoilage affect unit manufacturing cost and operating income?
- Unit Manufacturing Cost: no effect
- Operating Income: decrease