Example of Job Order Costing
The given transactions were made by a company in the month of December.
Direct Materials
a) 8,000/- was bought on credit, out of these, materials worth 5,000/- were returned to the suppliers.
b) 50,000/- was issued from the store
c) Indirect materials issued amounted to 5,000/-
d) Direct wages allocated to production amounted to 20,000/-
e) Goods worth 200,000/- were sold
f) Finished goods worth 100,000/- were transferred to the store.
g) The cost of goods sold was 140,000/-
h) Unpaid indirect expenses were 32,000/-
i) Indirect wages allocated amounted to 15,000/-
j) Non-manufacturing overheads incurred amounted to 20,000/-
k) Overhead expenses charged to the jobs - 60,000/-
Required
a) Prepare the stores ledger control Account
b) Factory overhead control Account
c) W.I.P. control Account
d) Costing P and L Account
Stores Ledger Control A/c
|
Creditors (material)
|
8,000
|
Creditors control
|
5,000
|
|
|
|
W.I.P
|
50,000
|
|
|
|
(Indirect materials)
|
|
|
|
|
Factory overheads
|
5,000
|
Factory Overheads Control Account
|
Stores Ledger (material)
|
5,000
|
W.I.P
|
60,000
|
|
Creditors (wages)
|
32,000
|
|
|
|
Incurred wages
|
15,000
|
|
|
|
P + LA/c
|
|
|
|
|
Over absorption
|
8,000
|
|
_____
|
|
|
60,000
|
|
60,000
|
W.I.P Control Account
|
Stores Ledger (material)
|
50,000
|
Finished goods stock
|
|
|
|
|
control
|
100,000
|
|
Control (D wages)
|
20,000
|
|
|
|
|
|
|
|
|
Overhead expenses
|
60,000
|
|
|
Costing P and L Account
|
Finished goods control
|
140,000
|
Sales
|
200,000
|
|
Non manufacturing
|
|
Factor overhead
|
8,000
|
|
Overheads
|
20,000
|
absorption
|
|
|
Costing profit
|
48,000
|
|
|