Job Order Costing

Question 1

How is the Predetermined Overhead Rate calculated?

Answer 1

Budgeted FOH cost divided by Budgeted activity level

Question 2

How is the Applied Overhead calculated?

Saang side siya? Debit or Credit?
Eh yung actual? Debit or Credit?

Answer 2

Predetermined OH rate x Actual Activity

Credit
Actual → Debit

Question 3

Ano yung mapupunta sa WIP? Actual OH or Applied OH?

Answer 3

Applied OH (kaya nagkakaroon ng Over or Under Applied)

Question 4

How should immaterial amounts of Under/Over-applied Overhead be disposed?

Answer 4

Close to COGS account.

Question 5

How should material amounts of Under/Over-applied Overhead be disposed?

Answer 5

Close to WIP, FG, and COGS (ending balances)

Question 6

If there’s an Over-applied OH (credit balance), what will happen to COGS?

Answer 6

Credit Balance → Credit COGS

Question 7

T-Account of RM Inventory

Answer 7

Debit
- Beginning Balance
- Purchases

Credit
- RM used (direct at indirect)

Question 8

T-Account of WIP Inventory

Ano dapat amount ng DL?

Answer 8

Debit
- Beginning Balance
- Total Manufacturing Cost (DM, DL, Applied OH)

Credit
- COGM

Gross of SSS, PhilHealth, etc.

Question 9

San napupunta yung indirect materials at indirect labor?

Answer 9

sa MOH (as actual cost, not applied)

Question 10

T-Account of FG Inventory

Answer 10

Debit
- Beginning Balance
- COGM

Credit
- COGS

Question 11

Ano kaibahan ng Spoiled Goods vs Defective Goods?

when it comes to good units

Answer 11

Spoiled
- hindi na marerework, sell as SCRAP
- ibabawas sa good units

Defective
- marerework pa, magiging GOOD units ulit

Question 12

Ano kaibahan ng Spoiled Goods vs Defective Goods?

burden

Answer 12

Spoiled
- Loss = NRV less Cost of Spoiled Goods

Defective
- Rework Cost = DM + DL + OH

Question 13

Treatment when Due to Internal Failure

Charged to
Allowance for Spoilage / Defective
Per Unit Cost

Answer 13

• MOH
• included na sa MOH
• same lang di magbabago

Question 14

Treatment when Due to Exacting Specification

Charged to
Allowance for Spoilage / Defective

Answer 14

• WIP
• hindi pa kasama sa MOH
• magbabago

Question 15

Journal Entry of Spoilage

when Due to Internal Failure
when Due to Exacting Specifications

Answer 15

Internal Failure
- Debit Cash @ NRV
- Credit WIP @ Cost
- Debit MOH - Loss (balancing figure)

Exacting Specifications
- Debit Cash @ NRV
- Credit WIP @ NRV

Question 16

What is the treatment for abnormal spoilage costs?

Answer 16

Should not be charged to jobs but written off as period cost debited to Loss due to Abnormal Spoilage.