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Job Cost Assignment   BEGINNING POSITION:   Bruno Inc

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Job Cost Assignment

 

BEGINNING POSITION:

 

Bruno Inc. is a small producer of custom dog houses in London.  It uses a job order costing system because each dog house is custom build for its owner and therefore receives varying attention and effort from the two factory departments, building and finishing.  Bruno uses a perpetual inventory system.   Bruno Inc. had the following post-closing trial balance as of December 31, 2019:

 

Cash	$29,750
Accounts Receivable	20,200
Raw Materials Inventory	?
Work in Process Inventory	?
Finished Goods Inventory	?
Unexpired Insurance	9,640
Office Equipment	30,000
Accumulated amortization - Office Equipment		$3,800
Factory Equipment	650,000
Accumulated Amortization - Factory Equipment		175,000
Accounts Payable		21,050
Wages and Salaries Payable		1,000
Accrued Utilities		2,000
Accrued Property Taxes		3,000
Capital Stock		101,300
Retained Earnings		?
	?	?

 

 

 

 

 

 

 

Detail in Subsidiary Records

As of December 31, 2019

 

Work in process:

 

Job order	Dep't	Direct	Direct	Factory	Total
Number		Materials	Labour	Overhead	Cost
19-17	Building	$2,584.00	$1,075.00	$1,111.00	$4,770.00
	Finishing	$333.00	$290.00	$125.00	$748.00
					$5,518.00

 

Finished goods:

 

Stock #	Reference	Quantity	Unit Cost	Total Cost
X-1	Job 19-15	222.00	82.00	$ ?
X-2	Job 19-16	820.00	19.00	$?
				$?

 

Raw materials:

 

RM Type	Quantity	Unit Cost	Total Cost
A	5,555	?___(A)	?
B	10,444	?___(B)	?
C	662	?___(C)	?
Supplies	Various		$2,051.00
			?

 

 

 

Labour costs and overhead costs:

 

The hourly rate including benefits for Building is $_____(D) and for finishing is $______(E).

 

To cost jobs as they are worked on, a predetermined or budgeted overhead rate was computed for 2020 based on the following budgeted cost drivers:

 

          Building department                     60,000 machine hours

          Finishing department                    $132,020 of direct labour

 

These overhead rates will be used throughout the year by each department.  All overhead will be applied to all jobs worked on during the year in proportion to the machine-hour and/or direct-labour cost devoted to each job.  Bruno Inc. rents its factory building.

 

This budget was prepared after careful consideration of the sales outlook for the coming year.  The forecasted budget consisted of the following items:

 

Bruno Inc.

Factory Overhead Budget

For The Year Ended December 31, 2020

 

		Building	Finishing	Total
Variable costs:
	Supplies	$14,200	$5,400	$19,600
	Indirect Labour	22,800	16,800	39,600
	Utilities	30,000	8,000	38,000
	Repairs	24,000	6,000	30,000
	Misc.	19,000	11,000	31,336
		110,000	47,200	157,200
Fixed costs:
	Insurance	7,000	2,400	9,600
	Amortization	95,000	14,400	128,400
	Rent	24,000	13,000	37,0000
	Property taxes	4,000	1,200	5,400
	Supervision	15,000	14,214	31,414
		145,000	45,214	211,814
Total Factory Overhead		$255,000	$92,414	$369,014
	FOH rate = budgeted FOH
	budgeted cost driver

 

TRANSACTIONS:

 

The following transactions occurred during the month of January 2020:

 

1. Purchases of raw materials (on account):

 

			RM Type	Units	$$
Receiving report #		1012	A	5,000	?
Receiving report #		1013	B	6,000	?
Receiving report #		1014	A	2,500	?
Receiving report #		1015	B	5,000	?
Receiving report #		1016	C	2,125	?
Receiving report #		1017	B	3,000	?
Receiving report #		1018	Supplies	N/A	$3,000.00

 

Assume that costs have not changed in the last year.

 

 

2. Returns on account:  47 units of material B.  (receiving report #1019)

 

 

3. The direct material requisitions were summarized, and the following data were shown on a material usage report.

 

Building Department

Direct Material Usage

For the Month Ended January 31, 2020

 

Requisition	RM Type	Job Order	Quantity
M89	B	19-18	1,500
M90	A	19-19	3,017
M91	A	19-20	800
M92	B	19-20	1,000
M93	B	19-19	3,000
M94	B	19-18	200
M95	A	19-21	1,900

 

 

 

Finishing Department

Direct Material Usage

For the Month Ended January 31, 2020

 

Requisition	Type	Job Order	Quantity
A301	C	19-17	5
A302	C	19-20	200
A303	C	19-18	800
A304	C	19-19	1,500
A305	C	19-20	20

 

4. A summary of payroll costs incurred as per the time tickets is as follows:

 

Actual Labour Hours Worked

For the Month Ended January 31, 2020

 

Work	Job
Ticket	Order	Building	Finishing
ML480	19-18	4
ML481	19-18	300
ML482	19-20	200
ML483	19-19	240
ML484	19-21	100
ML485	19-20	20
AL60	19-17		4
AL61	19-19		1,400
AL62	19-18		100
AL63	19-20		200
AL64	19-19		40
Total direct labour		864	1,744

 

Other payroll costs:

 

		Building	Finishing	Total
Indirect labour		$2,000	$1,500	$3,500
Factory Supervision		$1,200	$1,600	$2,800
Selling and admin. Wages				$6,000

 

 

5. Apply overhead to jobs.  See data for item 6 to obtain machine hours worked.  (A direct laborer operates more than one machine simultaneously, so machine hours are not necessarily equal to labour hours incurred by Builders).

 

 

6. Use the following information to (a) record the completion and  (b) the sale of the items:

 

Bruno Inc.

Production and Sales Data

For the Month Ended January 31, 2020

 

Job	Finished	Date	Mach	Stock	Invoice	Sold	Sales
#	Units	Finished	Hours	Number	Number	Units	Revenue
19-15	222	Dec. 11/19	n/a	X-1	#923	200	$40,000
19-16	820	Dec. 15/19	n/a	X-2	#924	800	36,000
19-17	50	Jan.   5/20	0	X-3	#925	20	6,800
19-18	1750	Jan. 12/20	3,000	X-4	#926	900	24,400
19-19	1000	Jan. 19/20	2,000	X-5	#927	950	75,000
19-20	100	Jan. 30/20	150	X-6	#928	55	8,500
19-21	Unfinished		800
			5,950				$190,700*

*All sales are on account.

 

 

7. Gross payroll (factory and office) of $41,250 is paid in cash.

 

 

 

 

8. The following additional overhead costs were incurred during January:

 

				Selling
Item	Total	Building	Finishing	& Admin.		Account to Credit
Supplies requisitioned	$2,000	$1,500	$400	$100		?
Utilities	4,000	2,700	800	500		Accrued utilities
Repairs by outsiders	3,000	2,350	600	50		A/P
Miscellaneous	3,000	2,000	900	100		A/P
Insurance	1,000	600	200	200		?
Amortization on equip.	11,000	9,500	1,200	300		?
Rent	4,000	2,000	1,400	600		A/P
Property taxes	800	450	250	100		Accr. prop. Taxes
	$28,800	$21,100	$5,750	$1,950

 

 

9. Utility bills received $2,723 (DR Accrued utilities and CR A/P).

 

 

10. Utility bills paid, $2,498.

 

 

11. Other selling and administrative expenses incurred, $12,019.

 

 

12. Other payments on account, $61,454.

 

 

13. Collections on account, $117,779.

 

 

14. Close under- or over-applied Factory Overhead to Cost of Goods Sold.

 

 

 

 

 

 

REQUIRED:

 

1. Enter all starting balances in the GL and subledgers.  You will need to calculate your raw materials inventory value (about $30,000) based on your assigned variables.  Adjust retained earnings to balance the opening trial balance.  Round all totals to the nearest dollar and all per unit numbers to two decimal places.

 

2. Journalize the above summary transactions, all dated January 31, 2020.  (No new balance sheet accounts are required.  You should need to add only the following temporary accounts: Revenue, Cost of Goods Sold, Selling & Administrative Expense, Factory Overhead.)

 

3. Post to the general ledger and subledgers for January 31, 2020. (It is recommended that you post as you go, especially for accounts that have subledgers.)

 

4. Prepare a Pre - Closing trial balance as of January 31, 2020.(This trial balance should include all the income statement accounts).

 

5. Prepare schedules that reconcile the raw materials, goods in process and finished goods subledgers with the general ledger accounts as of January 31, 2020.  A reconciliation template has been provided.

 

6. Prepare a Statement of Cost of Manufacturing for January 31, 2020.

 

7. Prepare an income statement and statement of retained earnings for January 31, 2020.

 

8. Prepare a balance sheet as of January 31, 2020.

 

9. Prepare and post a closing entry (or entries) for the month end.