Question

Mastery Problem: Job Order Costing Purl of Great Price Company Marla Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). Al wa ges are paid in cash at the end of each month. Each knitter has a knitting machine that is used about 2/3 of the knitter's time, the rest of the knitter's time being Involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week. The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value. Nov. 30 Trial Balance POGP Company Trial Balance November 30, 20Y8 Account Title Debit Credit Cash 20,000 Accounts Receivable 1,000 Supplies Materials 5,000 Work in Process 5,404 Equipment 12,000 Accumulated Depreciation Equipment Accounts Payable Common Stock Retained Earnings 12,000 Dividends 18,096 Sales 30 7,500 Cost of Goods Sold 255,040 Factory Overhead Wages Expense 13,750 200 825 150 10,000 15 330,490 330,490

Answer 1

1200 yo 3 000 Estimated Depreciation on Equipment Estimated total office Manager / Knitting supervisor 18000 Wages (360008 20 Estimated factory wtilities 19000 Estimated factory Rent To fal Estimated factory overhead 34200 Estimated Number of DLH for the year 500g

Pre-Determined overhead Rade T 고 Total Estimated factory overhead Estimated number of oln for the year del 342 DO -> 6.84 5000 Job 62 Sweaters wits Direct Materials Direct labour factory Total overhead Bal. Deci 5.000 300 14 5404 Dec 3000 1368 4368 975 +1125 +900/165+75+60 ) 6.84 33co 1472 Total lost 5ooo 9472 unit cost 200 Job 83 Sweater vests wits Bal. Dec. 1 0 Decolo Dec. 31 3500 10053 2052 4500 1545+13207.(103488+109) X 6.84 1635

Date particulars DO Decolo 3500 Ov. work-In Progress All To Material 3500 2B) | Added in Job Lost sheet see above 3 or 3POR work- Il - Progress All To wages Expenses Alc 3000 I-15 Dek b. 1368 work-iur Process All to factory overhead all 1368 c) Added to cost sheet 4. ๆ ขวา 9472 finished Goods All to work in progren the 9472 a 375 5 . Account Receivables AK TOY To sales All (758125) 1 9375 22- Dec mo 7104 Cost of goods sold all To finished goods ] 7104 [ [ 9472x75 10o

6) 16-31 Dec, a) my- 4500 450e b) work in progress All to wages Expeuses All work in progress All To factory overhead All nov. 2052 252 C) added to Cost + shat 7. now. factory overhead All Accuriulated Depreciation - Equipment (2400 + 4800 70 60 120 b Wages Expenses All [7500 + 12.500 Dr. 18750 2 DO 1250 factory over head All 35 X ] TO Cash Al- 7500 + supervisor salary 30000 112 = 2500) 10090 10000 wages Job 62 (65+75+60) x 15 Job 83 ( 103 +884 101) x15 3000 4500

my 1500 factory overhead All To Lash All Iseo d) factory overhead All 1275 To cash All 1295 factory over head under applied Actual (1500 + 1275+ 1250) 4025 Applied overhead (1472 +2052) +15 3539 under apped 486 45.00 15 I- Account factory overhead APP lied opening Ball WIP closing Bal. 3524 486 8. Cost of goods seld in Dr. 486 To factory overhead All 9. (A) Materials (5000 - 3500) WIP 1500 10340 2491 finished Goods 19964-7473) factory over head Cost of Goods sold ( 7473 + 486 ) 7951