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Tutorial 5 - JOC & Batch Costing

Q1Portland electronics delivered 1000 custom-designed computer monitors on February 10 to its customer, Video Shack; they had been ordered on January 1. The selling price for each monitor is RM350. Q2Marikh Berhad is preparing a job cost estimate that will be used to provide a quote for a potential customer.

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Muhammad Alif
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653 views

Tutorial 5 - JOC & Batch Costing

Q1Portland electronics delivered 1000 custom-designed computer monitors on February 10 to its customer, Video Shack; they had been ordered on January 1. The selling price for each monitor is RM350. Q2Marikh Berhad is preparing a job cost estimate that will be used to provide a quote for a potential customer.

Uploaded by

Muhammad Alif
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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ACOF 014

Introduction to Costing
Semester 2 2008 / 2009

TUTORIAL 5: JOC & Batch Costing

Q-1 Portland Electronics Inc. delivered 1000 custom-designed computer monitors on


February 10 to its customer, Video Shack; they had been ordered on January 1. The
following cost information was compiled in connection with this order:

Direct materials used:


Part A327: 1 unit costing RM60 per monitor
Part B149: 1 unit costing RM120 per monitor

Direct labour used:


Assembly: 6 hours per monitor at the rate of RM10 per hour
Inspection: 1 hour per monitor at the rate of RM12 per hour

In addition, manufacturing support costs are applied to the job at the rate of RM5 per
direct labour hour. The selling price for each monitor is RM350.

Required: Prepare a job cost sheet for this job and determine the cost per monitor

Q2- Marikh Berhad is preparing a job cost estimate that will be used to provide a
quote for a potential customer. Estimated costs for the job are to be based on the
following:

Direct Materials: RM2,890

Direct Labour: 230 hours at a basic rate of RM8.00 per hour.Direct


production staffs also receive a bonus each period. The
bonus is paid on actual hours time with calculated bonus
rate. The bonus rate per hour is calculated using the
following formula:

[(Time allowed – time worked)/time allowed] × Basic rate


per hour

The bonus to be included currently in the costing of all


jobs is based on the following estimates for the period:

Total time worked 3,500 labour hours


Total time allowed 4,000 labour hours

Production Overheads: Absorbed at 25% of prime cost (including labour bonus)


+ RM7.00 per direct labour hour.

1
Non-production Overheads: 20% of total production cost is added in order to
recover distribution, selling, and administrative costs.

Quoted prices are calculated to provide Marikh Berhad with a net profit margin of 20%
of sales.

Required:

a. Calculate the total estimated production cost of the job.

b. Calculate the price that should be quoted for the job.

c. Give an example of a business where job costing may be applied and describe the
features of this type of business which make the costing method appropriate.

Q3- Comelku Berhad is a company producing toys according to customers demand. At


the beginning of June 2008 the company has one incomplete job, Job 011(producing
1,500 toys), remained in progress which has the following costs:

Cost elements RM
Direct material 8,220
Direct labour 6,100
Production overhead 10,416

During June, the company has accepted another order, Job 012 (producing 2,000
toys), which make the company to incur the following cost for both jobs:

Job 011 Job 012


Direct material issued from RM7,578 RM13,221
store
Direct material returned to NIL (RM2,120)
stores
Direct labour hours 780 1,610

Direct labour is paid at a rate of RM6.00 per hour and production overheads are
absorbed as a rate of RM15.00 per direct labour hour.

At the end of June, both jobs were completed and upon completion, 20% of the total
production cost is added to cover administration costs

Required:

i- Calculated total costs for Job 011 and Job 012

ii- Calculate selling price per unit charged to each job if the company
policy is to have a profit mark-up of 30% of total costs.

2
Q4- Uyeno Electronics Company manufactures a variety of electronics components. In
May 2006, the company received an invitation from takayama, Inc. to bid on an order of
1,000 units of components C371 that must be delivered by August 16, 2006. The
following are the standard (estimated) requirements and prices for 1,000 units of C371:

Quantity Price
Direct material 2,000 units RM10 per unit
Direct labor 1,000 hours RM10 per hour

The cost of support resources is assigned to job based on direct labor hours (single cost
driver rate). The estimated support costs for 2006 are RM300,000 and the estimated
direct labor hours are 50,000. Uyeno has a policy to add a 20% markup to estimated job
costs to arrive at the bid price.

Required:

a) Prepare a job bid sheet to determine the bid price for this job
b) Assume that Takayama accepted Uyeno’s bid. After producing and
delivering the 1,000 units of C371 to Takayama on August 4,
Uyeno’s management accountants complied the following
information form this job:

Quantity Price
Direct material 2,100 units RM9.75 per unit
Direct labor 1,000 hours RM11 per hour

Prepare a job cost sheet to record the actual costs incurred on this job and provide brief
explanations for the differences between actual and the estimated.

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