Prepare Job Order Cost Report


Melody Instruments Co. Ltd (‘the Company’) is a global supplier of guitars for large chains of music stores. A key customer has asked Bob, the Sales Manager, if the Company is able to supply a new guitar-like instrument, the ukulele. The initial order is expected to be 10,000 units. Bob is keen to clinch the new contract. He approaches you, the Financial Controller, to help him estimate the unit cost of producing the ukulele. He needs the information to finalize a sales proposal to the customer, including an appropriate pricing strategy that will increase the probability of securing the order. Wendy, the Production Manager, agrees with Bob that the new order presents an excellent opportunity for the Company to expand its product lines. With some additional resources and processes, a completed mass-produced guitar can be made into a ukulele. She provided you with the following information:

Production Data for the six months ended 30 June 2013

Work-in-progress ('WIP') as at 1 January










Percentage of completion





During the first six months of 2013





Units started production





Costs incurred





WIP as at 30 June










Percentage of completion





 Additional information:

i. Estimated annual overhead and direct labor costs for 2013 are $150,000 and $200,000 respectively.

ii. Estimated additional costs to be incurred to produce 10,000 units of ukulele

Strings made from a special material       $20,000

Carpenters                                              $3,000

Tuning technicians                                    $2,000

iii. Similar to the guitar, direct materials and conversion costs are incurred evenly throughout the process.

(a) Using completed guitars as the base, apply a job-costing system to prepare a Job-Order Cost Report for the ukulele. Overheads are allocated using direct labor costs.

(b) The net profit margin of the Company has been declining over the past three years. Wendy is under pressure to play her part in improving profitability by reducing the unit cost of each guitar. You recently discovered that she has been substituting some components of the guitar with cheaper but lower-grade materials since the beginning of 2013. You recalled your casual conversation with Bob two weeks ago on the increasing frequency of customer complaints on the quality of products over the last few months. Sales report shows that the sales volume has not been affected so far. As the Financial Controller, discuss what should you do?


Total Word Count 339

Download Full Solution


  • HWA

    this is a very good website

  • HWA

    I have 50 questions for the same test your page is showing only 28

  • HWA

    hi can you please help or guide me to answer my assignments. thanks

  • HWA

    hi can anyone help or guide me to my assignments. thanks

  • HWA

  • HWA

    This solution is perfect ...thanks

  • HWA

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA

    Perfect bank of solution. 

  • HWA

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA

    works fine.