BJ Manufacturing Company uses Job Order Costing system to accumulate production costs. At the beginning of the year, the balances of the inventory accounts are as follows: Raw Materials Inventory ..................... P168,000 Work in Process Inventory ..................... 210,000 Job 101........................ P105,000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
BJ Manufacturing Company uses
beginning of the year, the balances of the inventory accounts are as follows:
Raw Materials Inventory ..................... P168,000
Work in Process Inventory ..................... 210,000
Job 101........................ P105,000
Job 102 ....................... 105,000
Finished Goods Inventory ..................... 182,000
Job 005 ...................... P 85,000
Job 006 ...................... 97,000
The summaries of transactions for the year are as follows:
(a) Raw Materials costing P826,000 were purchased on account.
(b) Materials issued to production, P785,000 distributed as follows:
Job 101 P180,000 Job 103 P150,000
Job 102 P125,000 Job 104 P205,000
Indirect balance Job 105 P95,000
(c) Heat, light and power, factory plant, for the year was P116,000.
(d)
(e) Marketing and administrative expenses, P250,000
(f) Production wages for the year was P1,250,000 of which 20% is for indirect laborers.
The direct wages were distributed as:
Job 101, 15%; Job 102, 20%; Job 103, 25%; Job 104, 30%; Job 105, 10%;
(g) Employers’ share for SSS, Medicare and Pag-ibig were estimated to be 20% of the production wages
(h) 80% of direct labor cost was applied as
(i) Advertising costs for the year was P56,000
(j) Expired insurance was P50,000 of which, 80% is for the factory.
(k) The finished goods stock at the beginning of the year were sold on account at cost
plus 40% mark up
(l) Miscellaneous
(m) Job 105 was unfinished at the end of the year. Jobs 103 and 104 were delivered to
the customer at cost plus 40% mark up on cost.
Required:
(1) Prepare T accounts for the following: Raw Materials Inventory, Work in Process
Inventory, Finished Goods Inventory, Manufacturing Overhead, Cost of goods sold
and Sales. Enter the beginning balances.
(2) Enter the transactions for the year directly to the T-Accounts
(3) Prepare job cost sheets for the jobs in process
(4) Determine the balances of the three inventory accounts at the end of the year
(5) Prepare a Statement of Costs of Goods Manufactured
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