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BUS 535 Managerial Accounting Job Order Costing Activity Report

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ACTIVITY 2
Rushikesh Ajay Ambildhok
Managerial Accounting BUS 535
3/20/2021
Dr, Yvan Nezerwe
Westcliff University
QUESTION:
Prepare income statements in both job order costing and activity-based costing formats for a
hypothetical case. Your example should include at least three activities and at least two
products. If you do both correctly the operating income in both statements should be
identical. Explain the initial assumptions and the calculations in detail. Provide in-text
citations.
ANSWER:
A manufacturing company produces two products.
Product X and Product Y.
Job Order Costing
Details
Product X
Product Y
Sales units
500
1000
Selling Price
$250.00
$300.00
Direct Material
$25.00
$35.00
Direct Labour
2 hours
3 hours
Total Direct Labour hours
1000
3000
Total direct labor hours = 500 * 2 = 1000 for Product X
Total direct labor hours = 1000 * 3 = 3000 for Product Y
Direct Labour rate: $20.00 per hour
Variable overhead: $20.00 per hour
Fixed Overhead: $120,000
Fixed overhead is absorbed based on Direct Labour hours.
Fixed overhead absorption rate
Fixed overhead
$120,000
direct labour hours
4000

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Fixed overhead at $30.00 per hour ($120,000 / 4000)
Job Oder Costing Income Statement
Product X
Calculations:
Sales: 500*250 = $125,000
Direct Material: 500*25 = $12,500
Direct Labour: 1000*20 = $20,000
Variable overhead: 1000*20 = $20,000
Fixed overhead: 1000*30 = $30,000
Total cost: 12,500 + 20,000 + 20,000 + 30,000 = $82,500
Net Profit: Total Selling Price Total costs
Total selling price = 500 *250 = $125,000
125,000 82,500 = $42,500
Similar calculations were performed for Product Y and the details have been provided in the below
table.
Details
Product Y
Total
Sales
$ 3,00,000.00
$ 4,25,000.00
Direct Material
$ 35,000.00
$ 47,500.00
Direct labour
$ 60,000.00
$ 80,000.00
Variable Overhead
$ 60,000.00
$ 80,000.00
Fixed Overhead
$ 90,000.00
$ 1,20,000.00
Total cost
$ 2,45,000.00
$ 3,27,500.00
NET PROFIT
$ 55,000.00
$ 97,500.00

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ACTIVITY 2 Rushikesh Ajay Ambildhok Managerial Accounting – BUS 535 3/20/2021 Dr, Yvan Nezerwe Westcliff University QUESTION: Prepare income statements in both job order costing and activity-based costing formats for a hypothetical case. Your example should include at least three activities and at least two products. If you do both correctly the operating income in both statements should be identical. Explain the initial assumptions and the calculations in detail. Provide in-text citations. ANSWER: A manufacturing company produces two products. Product X and Product Y. Job Order Costing Details Product X Product Y Sales units 500 1000 Selling Price $250.00 $300.00 Direct Material $25.00 $35.00 Direct Labour 2 hours 3 hours Total Direct Labour hours 1000 3000 Total direct labor hours = 500 * 2 = 1000 for Product X Total direct labor hours = 1000 * 3 = 3000 for Product ...
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