Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch of souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. Exclusive's predetermined overhead rate for 2020 was computed from the following data: $2,400,000 $2,000,000 Total estimated factory overhead Total estimated direct labour cost The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June: WIP Inventory A/C June 1 Balance b/f $15,000 Direct Materials Used 123,000 Additional data: Total material requisitioned. $153,000 Manufacturing Labour Costs incurred Other manufacturing overheads incurred $163,500 (75% represents direct labour) $94,275 .......... Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales.
Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch of souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. Exclusive's predetermined overhead rate for 2020 was computed from the following data: $2,400,000 $2,000,000 Total estimated factory overhead Total estimated direct labour cost The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June: WIP Inventory A/C June 1 Balance b/f $15,000 Direct Materials Used 123,000 Additional data: Total material requisitioned. $153,000 Manufacturing Labour Costs incurred Other manufacturing overheads incurred $163,500 (75% represents direct labour) $94,275 .......... Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales.
Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch of souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. Exclusive's predetermined overhead rate for 2020 was computed from the following data: $2,400,000 $2,000,000 Total estimated factory overhead Total estimated direct labour cost The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June: WIP Inventory A/C June 1 Balance b/f $15,000 Direct Materials Used 123,000 Additional data: Total material requisitioned. $153,000 Manufacturing Labour Costs incurred Other manufacturing overheads incurred $163,500 (75% represents direct labour) $94,275 .......... Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales.
a) Compute Exclusive Souvenirs’ gross profit earned on the jobs, after adjusting for the manufacturing
overhead variance.
b) Determine the balance in the Work in Process Inventory account on June 30
c) State and explain three (3) differences between a job costing system and a process costing system
Transcribed Image Text:Exclusive Souvenirs Hut does customize, hand-crafted memorabilia for hotels, in which each batch of
souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive
production process, so it assigns manufacturing overhead based on direct labour cost. Exclusive's
predetermined overhead rate for 2020 was computed from the following data:
$2,400,000
$2,000,000
Total estimated factory overhead
Total estimated direct labour cost
The WIP account given below relates to the activities of Exclusive Souvenirs for the month of June:
WIP Inventory A/C
June 1 Balance b/f
$15,000
Direct Materials Used
123,000
Additional data:
Total material requisitioned
$153,000
.............
Manufacturing Labour Costs incurred
Other manufacturing overheads incurred . .
$163,500 (75% represents direct labour)
$94,275
..... ..... ...
Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to
the hotel on account at a margin of 33 1/3% on sales.
Definition Definition Accounting technique that tracks the costs of materials, labor, and overhead for a particular job. The main purpose of job costing is to determine the profit or loss for each job. Repetitive work or poorly allocated employees can be addressed for the upcoming project through job costing.
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