Managerial
Job costing sheet
Build job costs with a predetermined overhead rate and find under- or over-applied overhead.
Brenmoor Metalworks fabricates to order. Overhead is applied to each job using a rate set from the annual budget; at the end of March, actual overhead is compared with what was applied.
Budget and period figures
Predetermined overhead rate: 480,000.00 ÷ 16,000 hours = 30.00 per direct labour hour
Job cost sheets
| Job | Materials requisitioned | Labour hours | Labour | Overhead applied | Job cost | Status | Remove |
|---|---|---|---|---|---|---|---|
| 15,000.00 | 18,000.00 | 51,500.00 | |||||
| 35,000.00 | 42,000.00 | 119,000.00 | |||||
| 8,750.00 | 10,500.00 | 29,050.00 | |||||
| Total | 70,300.00 | 2,350 | 58,750.00 | 70,500.00 | 199,550.00 | ||
| Actual overhead incurred | 72,000.00 |
| Less overhead applied to jobs | (70,500.00) |
| Under-applied | 1,500.00 |
Jobs were charged 1,500.00 less overhead than was actually spent. The shortfall is debited to cost of sales, increasing it. Writing it off to cost of sales is usual when the amount is small; a material difference would be prorated across WIP, finished goods and cost of sales.
| 1220Work in progress | 29,050.00 |
| 1230Finished goods | 119,000.00 |
| 5000Cost of sales before adjustment | 51,500.00 |
| Cost of sales after adjustment | 53,000.00 |
Cost flow entries
| Date | Account | Debit | Credit |
|---|---|---|---|
| 31 Mar | 1220Work in progress | 70,300.00 | |
| 1210Raw materials | 70,300.00 | ||
| Materials requisitioned to jobs | |||
| 31 Mar | 1220Work in progress | 58,750.00 | |
| 2110Salaries payable | 58,750.00 | ||
| Direct labour charged to jobs | |||
| 31 Mar | 1260Manufacturing overhead control | 72,000.00 | |
| 2100Accrued expenses | 72,000.00 | ||
| Actual overhead incurred (indirect labour, power, factory rent — summarised) | |||
| 31 Mar | 1220Work in progress | 70,500.00 | |
| 1260Manufacturing overhead control | 70,500.00 | ||
| Overhead applied at 30.00 per direct labour hour | |||
| 31 Mar | 1230Finished goods | 170,500.00 | |
| 1220Work in progress | 170,500.00 | ||
| Completed jobs transferred to finished goods | |||
| 31 Mar | 5000Cost of sales | 51,500.00 | |
| 1230Finished goods | 51,500.00 | ||
| Cost of jobs sold | |||
| 31 Mar | 5000Cost of sales | 1,500.00 | |
| 1260Manufacturing overhead control | 1,500.00 | ||
| Under-applied overhead written off to cost of sales | |||
Learn it properly
- Job-order costing · Cost and Managerial Accounting
- Manufacturing: work in progress and overhead · Industry Accounting Cases
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