Exam 5: Job-Order Costing

Figure 5-8. John's Water Slides makes custom water slides for hotels.On September 1,there were three jobs in process,Jobs 812,813,and 814.Two more jobs were started during September,Jobs 815 and 816.By September 30,Jobs 812,814,and 816 were finished.The following data has been collected: Overhead is applied at the rate of 120% of direct labor cost.Jobs are sold at cost plus 60%.Selling and administrative expenses for September totaled $2,950.By September 30,Jobs 812 were 816 are sold,but the customer who ordered Job 814 decided he did not want the slide so it is still in the warehouse. Refer to Figure 5-8.What is John's operating income for the month of September?

Brady Corporation has estimated overhead to be $250,000 for the year based on an estimated amount of direct labor hours of 40,000.Actual direct labor hours for the year are 41,500 and actual overhead is $258,900. Required: A.)Calculate the predetermined overhead rate. B.)Calculate how much overhead has been applied. C.)Calculate the overhead variance. D.)Assuming that the variance is immaterial,prepare the journal entry to close the variance.

Elf Company produces ornamental trees and uses normal costing.Elf applies overhead based on direct labor hours.The following data are provided:

A source document by which direct labor costs are assigned to individual jobs is known as a _______________.

Figure 5-11. Olson Corporation constructs new homes.Assume that Olson uses a job costing system.During May of the current year,the following transactions occurred: Olson purchased $4,500 of lumber on account. Olson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour. Depreciation of $1,500 on equipment used to build new houses was recorded. A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash. Refer to Figure 5-11.The journal entry to record the requisition of lumber for Olson would include a

A _______ is one distinct unit or set of units.

The cost of completed units is always debited to Work-in-Process and credited to Finished Goods.

Figure 5-4. Hill Company uses job-order costing.At the end of the month,the following data was gathered: Hill's selling price is cost plus 50% for each of its products. Refer to Figure 5-4.What is the total in the work-in-process account?

The overhead variance is least likely to be

_________________ is found by multiplying the predetermined overhead rate by the actual use of the associated activity for the period.

Manufacturing and service firms producing unique products or services require job-order accounting systems.

What type of event would cause two separate journal entries to be made?

In a _______________________________ costs are accumulated by job.

Which type of cost poses the most problems in using an actual cost system?

Which of the following is true?

Figure 5-5. Brillant Design Company makes custom chairs for individual customers.On October 1,there was one job in process,Job 243,with a cost of $1,300.Jobs 244,245,and 246 were started during the month of October.Data on costs added during the month are as follows: Overhead is applied to production at the rate of 70% of direct labor cost.Job 245 was completed on October 14 and the client was billed at cost plus 55%.All other jobs remained in process. Refer to Figure 5-5.What is the price of Job 245?

Ending Work-in-Process for Lee's Carpentry was $64,000 for January.Direct labor and direct materials together for the month were $39,000.Direct labor was twice as much as direct materials.The overhead rate is 70% of direct labor.No jobs were finished during the month.What was beginning Work-in-Process?

Manufacturing overhead

A normal job-order costing system is a system that uses:

Figure 5-8. John's Water Slides makes custom water slides for hotels.On September 1,there were three jobs in process,Jobs 812,813,and 814.Two more jobs were started during September,Jobs 815 and 816.By September 30,Jobs 812,814,and 816 were finished.The following data has been collected: Overhead is applied at the rate of 120% of direct labor cost.Jobs are sold at cost plus 60%.Selling and administrative expenses for September totaled $2,950.By September 30,Jobs 812 were 816 are sold,but the customer who ordered Job 814 decided he did not want the slide so it is still in the warehouse. Refer to Figure 5-8.What is the cost of goods sold for September?