Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 39

Job Costing

Operations of Valport Company for the year ended November 30, 2010, have been completed, and all of the accounting entries have been made for the year except the transfer of costs from Work-in-Process to Finished Goods for the jobs completed in November, and the transfer of costs from Finished Goods to Cost of Goods Sold for the jobs that have been sold during November. Summarized data that have been accumulated from the accounting records as of October 31, 2010, and for November 2010, are shown below.

Jobs N11-007, N11-013, and N11-015 were completed during November 2010. All completed jobs except Job N11-013 had been turned over to customers by the close of business on November 30, 2010.

Required

1. Prepare a Statement of Cost of Goods Manufactured for Valport Company for the year ended November 30, 2010.

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2. Determine the amount of Cost of Goods Sold for the year ended November 30, 2010.

		November 2010 Activity
Work-in-Process	Balance 10/31/10	Direct Materials	Direct Labor	Machine-Hours
Job No.:
N11-007	$ 87,000	$ 1,500	$ 4,500	300
N11-013	55,000	4,000	12,000	1,000
N11-015	-0-	25,600	26,700	1,400
D12-002	-0-	37,900	20,000	2,500
D12-003	-0-	26,000	16,800	800
Totals	$142,000	$95,000	$80,000	6,000

	Operating Activity
	Through	November
	10/31/10	2010
Manufacturing overhead applied
Indirect materials	$ 125,000	$ 9,000
Indirect labor	345,000	30,000
Utilities	245,000	22,000
Depreciation	385,000	35,000
Total applied overhead	$1,100,000	$96,000
Other items
Material purchases*	$ 965,000	$98,000
Direct labor costs	$ 845,000	$80,000
Machine-hours	73,000	6,000

	Account Balances at:
	12/01/09	11/30/10
Materials inventory*	$105,000	$85,000
Work-in-process inventory	60,000	150,000
Finished goods inventory	125,000	225,000

*Material purchases and materials inventory consist of both direct and indirect materials

Step 1 of 3

Direct costs are those costs which can be clearly related to certain good or activity. Indirect costs are those costs which cannot be clearly related to certain good or activity. Cost is expense of resource which happens when the resource is used.