How often Job costing is asked

Where it was asked

What costs marks here

The questions

1. Oct/Nov 2014, Q3(a)15 marks

   XYZ Limited manufactures a variety of products for its clients according to each client's specifications. The following details were obtained for the month of July. Opening inventory of raw materials stood at R45 000 at the start of the month, and further material purchases during the month amounted to R165 000. There was no opening work-in-process (WIP) at the beginning of July. Materials requisitioned to jobs were: Job 1 R55 000, Job 2 R83 000 and Job 3 R41 500, giving a total of R179 500. Wages paid for the month were: Job 1 (500 hours) R60 000, Job 2 (800 hours) R95 000, Job 3 (350 hours) R55 000, and indirect labour R35 000, totalling R245 000. Other manufacturing overheads incurred during July consisted of factory rental R12 000, electricity and water R18 000, and depreciation R25 000, amounting to R55 000 in total. Overheads are absorbed into jobs on the basis of direct labour hours; the annual budgeted manufacturing overheads amount to R100 000 and the estimated average normal capacity is 2 000 direct labour hours per year. During July, Jobs 1 and 2 were finished and billed to the clients for R150 000 and R250 000 respectively. For XYZ Limited, work out the profit or loss made in July on each individual job (Job 1, Job 2 and Job 3) as well as the overall profit or loss for the company for the month, using the information given about materials requisitioned, wages paid, overheads incurred and absorbed, and the invoiced amounts for the completed jobs (Job 1 billed at R150 000 and Job 2 billed at R250 000).

2. Oct/Nov 2014, Q3(b)2 marks

   XYZ Limited manufactures a variety of products for its clients according to each client's specifications. The following details were obtained for the month of July. Opening inventory of raw materials stood at R45 000 at the start of the month, and further material purchases during the month amounted to R165 000. There was no opening work-in-process (WIP) at the beginning of July. Materials requisitioned to jobs were: Job 1 R55 000, Job 2 R83 000 and Job 3 R41 500, giving a total of R179 500. Wages paid for the month were: Job 1 (500 hours) R60 000, Job 2 (800 hours) R95 000, Job 3 (350 hours) R55 000, and indirect labour R35 000, totalling R245 000. Other manufacturing overheads incurred during July consisted of factory rental R12 000, electricity and water R18 000, and depreciation R25 000, amounting to R55 000 in total. Overheads are absorbed into jobs on the basis of direct labour hours; the annual budgeted manufacturing overheads amount to R100 000 and the estimated average normal capacity is 2 000 direct labour hours per year. During July, Jobs 1 and 2 were finished and billed to the clients for R150 000 and R250 000 respectively. State the Rand value of XYZ Limited's closing inventory of raw materials and the closing work-in-process (WIP) balance as at the end of July, based on the transactions described.

3. Oct/Nov 2014, Q3(c)3 marks

   XYZ Limited manufactures a variety of products for its clients according to each client's specifications. The following details were obtained for the month of July. Opening inventory of raw materials stood at R45 000 at the start of the month, and further material purchases during the month amounted to R165 000. There was no opening work-in-process (WIP) at the beginning of July. Materials requisitioned to jobs were: Job 1 R55 000, Job 2 R83 000 and Job 3 R41 500, giving a total of R179 500. Wages paid for the month were: Job 1 (500 hours) R60 000, Job 2 (800 hours) R95 000, Job 3 (350 hours) R55 000, and indirect labour R35 000, totalling R245 000. Other manufacturing overheads incurred during July consisted of factory rental R12 000, electricity and water R18 000, and depreciation R25 000, amounting to R55 000 in total. Overheads are absorbed into jobs on the basis of direct labour hours; the annual budgeted manufacturing overheads amount to R100 000 and the estimated average normal capacity is 2 000 direct labour hours per year. During July, Jobs 1 and 2 were finished and billed to the clients for R150 000 and R250 000 respectively. Determine whether XYZ Limited over-recovered or under-recovered its production overheads for July, and calculate the amount of this over- or under-recovery, using the actual overheads incurred of R55 000 plus indirect labour of R35 000, the overhead absorption rate based on budgeted annual overheads of R100 000 and normal capacity of 2 000 direct labour hours per annum, and the actual direct labour hours worked on Jobs 1, 2 and 3 (500, 800 and 350 hours respectively).

4. Oct/Nov 2013, Q1.52 marks · multiple choice

   Question 1 is a multiple-choice section made up of ten short questions, numbered 1.1 to 1.10, each worth 2 marks. For each one you must write down the question number together with the letter (A, B, C or D) of the option you consider correct. Jambo Plumbing Services is in the process of implementing a costing system and requires the expertise of a management accountant; its manager, P. Postman, approaches you for advice. Which one of the following statements is NOT true about a job costing system? A. Job costing is appropriate where homogeneous products are manufactured using the same production facilities; B. Job costing is appropriate where heterogeneous products are manufactured using the same production facilities; C. A common example of a business where job costing is applied is a workshop where repairs are carried out on different vehicles and the cost of repairing each vehicle is calculated separately; D. Job costing is not appropriate in industries where large quantities of similar products pass through a single process or consecutive processes during production.

5. May/Jun 2013, Q7.12 marks

   Mboni Tshivhasa makes clay pots that she sells mainly to foreign tourists at the Punda Maria Gate of the Kruger National Park. The pots are painted with enamel paint after being fired in an open straw fire, and every job is given a unique African name to identify it. Mboni has asked you, as her management accountant, to determine the cost of each job using a job costing system. The following balances were extracted from her books on 1 April 2013: direct material R90 000; bank R3 200; sales expenses R3 600. During April 2013 the following costs were allocated to jobs: Job Khali - material R25 200, wages R16 800; Job Mvuvhelo - material R32 400, wages R20 160; Job Lusiko - material R18 700, wages R9 360; Job Mutondo - material R2 900, wages nil. Additional information: (1) actual manufacturing overhead costs incurred during the month were R72 600; (2) a mark-up of 50% is added to the total cost of each job to arrive at its selling price; (3) overheads are applied to production at a rate of 90% of direct material costs; (4) Jobs Khali, Mvuvhelo and Lusiko were completed and transferred to the finished goods account; (5) Jobs Khali and Lusiko were sold on 30 April 2013. Using the information given about Mboni Tshivhasa's job costing records for April 2013, prepare the Direct material control general ledger account, properly balanced.

6. May/Jun 2013, Q7.22 marks

   Mboni Tshivhasa makes clay pots that she sells mainly to foreign tourists at the Punda Maria Gate of the Kruger National Park. The pots are painted with enamel paint after being fired in an open straw fire, and every job is given a unique African name to identify it. Mboni has asked you, as her management accountant, to determine the cost of each job using a job costing system. The following balances were extracted from her books on 1 April 2013: direct material R90 000; bank R3 200; sales expenses R3 600. During April 2013 the following costs were allocated to jobs: Job Khali - material R25 200, wages R16 800; Job Mvuvhelo - material R32 400, wages R20 160; Job Lusiko - material R18 700, wages R9 360; Job Mutondo - material R2 900, wages nil. Additional information: (1) actual manufacturing overhead costs incurred during the month were R72 600; (2) a mark-up of 50% is added to the total cost of each job to arrive at its selling price; (3) overheads are applied to production at a rate of 90% of direct material costs; (4) Jobs Khali, Mvuvhelo and Lusiko were completed and transferred to the finished goods account; (5) Jobs Khali and Lusiko were sold on 30 April 2013. Using the information given about Mboni Tshivhasa's job costing records for April 2013, prepare the Manufacturing overhead control general ledger account, properly balanced.

7. May/Jun 2013, Q7.33 marks

   Mboni Tshivhasa makes clay pots that she sells mainly to foreign tourists at the Punda Maria Gate of the Kruger National Park. The pots are painted with enamel paint after being fired in an open straw fire, and every job is given a unique African name to identify it. Mboni has asked you, as her management accountant, to determine the cost of each job using a job costing system. The following balances were extracted from her books on 1 April 2013: direct material R90 000; bank R3 200; sales expenses R3 600. During April 2013 the following costs were allocated to jobs: Job Khali - material R25 200, wages R16 800; Job Mvuvhelo - material R32 400, wages R20 160; Job Lusiko - material R18 700, wages R9 360; Job Mutondo - material R2 900, wages nil. Additional information: (1) actual manufacturing overhead costs incurred during the month were R72 600; (2) a mark-up of 50% is added to the total cost of each job to arrive at its selling price; (3) overheads are applied to production at a rate of 90% of direct material costs; (4) Jobs Khali, Mvuvhelo and Lusiko were completed and transferred to the finished goods account; (5) Jobs Khali and Lusiko were sold on 30 April 2013. Using the information given about Mboni Tshivhasa's job costing records for April 2013, prepare the Work-in-process control general ledger account, properly balanced.

8. May/Jun 2013, Q7.41 mark

   Mboni Tshivhasa makes clay pots that she sells mainly to foreign tourists at the Punda Maria Gate of the Kruger National Park. The pots are painted with enamel paint after being fired in an open straw fire, and every job is given a unique African name to identify it. Mboni has asked you, as her management accountant, to determine the cost of each job using a job costing system. The following balances were extracted from her books on 1 April 2013: direct material R90 000; bank R3 200; sales expenses R3 600. During April 2013 the following costs were allocated to jobs: Job Khali - material R25 200, wages R16 800; Job Mvuvhelo - material R32 400, wages R20 160; Job Lusiko - material R18 700, wages R9 360; Job Mutondo - material R2 900, wages nil. Additional information: (1) actual manufacturing overhead costs incurred during the month were R72 600; (2) a mark-up of 50% is added to the total cost of each job to arrive at its selling price; (3) overheads are applied to production at a rate of 90% of direct material costs; (4) Jobs Khali, Mvuvhelo and Lusiko were completed and transferred to the finished goods account; (5) Jobs Khali and Lusiko were sold on 30 April 2013. Using the information given about Mboni Tshivhasa's job costing records for April 2013, prepare the Finished goods general ledger account, properly balanced.

9. May/Jun 2013, Q7.52 marks

   Mboni Tshivhasa makes clay pots that she sells mainly to foreign tourists at the Punda Maria Gate of the Kruger National Park. The pots are painted with enamel paint after being fired in an open straw fire, and every job is given a unique African name to identify it. Mboni has asked you, as her management accountant, to determine the cost of each job using a job costing system. The following balances were extracted from her books on 1 April 2013: direct material R90 000; bank R3 200; sales expenses R3 600. During April 2013 the following costs were allocated to jobs: Job Khali - material R25 200, wages R16 800; Job Mvuvhelo - material R32 400, wages R20 160; Job Lusiko - material R18 700, wages R9 360; Job Mutondo - material R2 900, wages nil. Additional information: (1) actual manufacturing overhead costs incurred during the month were R72 600; (2) a mark-up of 50% is added to the total cost of each job to arrive at its selling price; (3) overheads are applied to production at a rate of 90% of direct material costs; (4) Jobs Khali, Mvuvhelo and Lusiko were completed and transferred to the finished goods account; (5) Jobs Khali and Lusiko were sold on 30 April 2013. Based on the information about Mboni Tshivhasa's job costing records for April 2013, calculate the profit or loss she made for the month of April 2013.