Exam 7: Job Costing

Midwest Corporation has provided the following data concerning manufacturing overhead for 2020: Estimated manufacturing overhead for the year \3 0,000 Estimated direct labor hours for the year 2,000 Two jobs were worked on during the year: Job A-101 and Job A-102. The number of direct labor-hours spent on Job A-101 and Job A-102 were 1,200 and 1,000, respectively. The actual manufacturing overhead was $37,000. - What was the amount of manufacturing overhead applied to Job A-101?

The management of Grainger Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 48,000 machine-hours. In addition, capacity is 53,000 machine-hours and the actual activity for the year is 47,700 machine-hours. All of the manufacturing overhead is fixed and is $1,144,800 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year. Job SUA-600, which required 40 machine-hours, is one of the jobs worked on during the year. Required: a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base. b. Determine how much overhead would be applied to Job SUA-600 if the predetermined overhead rate is based on estimated amount of the allocation base. c. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. d. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. e. Determine how much overhead would be applied to Job SUA-600 if the predetermined overhead rate is based on the amount of the allocation base at capacity. f. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

Delgato Corporation, a manufacturing company, has provided data concerning its operations for September. The beginning balance in the raw materials account was $37,000 and the ending balance was $29,000. Raw materials purchases during the month totaled $57,000. Manufacturing overhead cost incurred during the month was $102,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for November was:

Which of the following companies would most likely use job costing?

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050. - How much overhead would be applied to production?

Which of the following statements is(are) true regarding the application of manufacturing overhead? (A) Manufacturing overhead is only recorded on the job cost sheets when financial statements are prepared or a job is completed. (B) Overapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

The journal entry to record the requisition of direct materials for new jobs started during the period is: A Work-In-Process Inventory xxx Materials Inventory xxx B. Materials inventory Purchases xxx C. Cost of Goods Sold xxx Finished Goods Inventory xxx D. Finished Goods Inventory Work-In-Process Inventory

Why might a company use a predetermined rate for applying overhead rather than just apply actual overhead?

The balance in the Work-in-Process Inventory account equals:

The following selected data were taken from the books of the Owens O-Rings Company. The company uses job costing to account for manufacturing costs. The data relate to April operations. (1) Materials and supplies were requisitioned from the stores clerk as follows: Job 405, material X, $7,000. Job 406, material X, $3,000; material Y, $6,000. Job 407, material X, $7,000; material Y, $3,200. For general factory use: materials A, B, and C, $2,300. (2) Time tickets for the month were chargeable as follows: Job 405 \ 11,000 3,000hours Job 406 14,000 3,600hours Job 407 8,000 1,900hours Indirect labor 3,700 (3) Other information: Factory paychecks for $36,700 were issued during the month. Various factory overhead charges of $19,400 were incurred on account. Depreciation of factory equipment for the month was $5,400. Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour. Job orders completed during the month: Job 405 and Job 406. Selling and administrative costs were $2,100. Factory overhead is closed out only at the end of the year. - If Job 406 was sold on account for $41,500, how much gross profit would be recognized for the job?

The management of Atlas Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 19,000 machine-hours. In addition, capacity is 21,000 machine-hours and the actual activity for the year is 18,200 machine-hours. All of the manufacturing overhead is fixed and is $71,820 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year. Required: a. Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base. b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. c. Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity. d. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

The following selected data were taken from the books of the Fisher Foil Company. The company uses job costing to account for manufacturing costs. The data relate to June operations. (1) Materials and supplies were requisitioned from the stores clerk as follows: Job 405, material X, $7,000. Job 406, material X, $3,000; material Y, $6,000. Job 407, material X, $7,000; material Y, $3,200. For general factory use: materials A, B, and C, $2,300. (2) Time tickets for the month were chargeable as follows: Job 405 \ 11,000 300 Job 406 14,000 Job 407 8,000 190 Indirect labor 3,700 (3) Other information: There was no beginning work-in-process inventory. Factory paychecks for $36,700 were issued during the month. Various factory overhead charges of $19,400 were incurred on account. Depreciation of factory equipment for the month was $5,400. Factory overhead was applied to jobs at the rate of $35.00 per direct labor hour. Job orders completed during the month: Job 405 and Job 406. Selling and administrative costs were $2,100. Factory overhead is closed out only at the end of the year. Required: (a) Determine the ending work-in-process balance on June 30. (b) Determine the cost of goods manufactured for June. (c) Is factory overhead over- or underapplied for June? What is the monthly value?

The management of Philly Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 37,000 machine-hours. In addition, capacity is 46,000 machine-hours and the actual activity for the year is 36,900 machine-hours. All of the manufacturing overhead is fixed and is $697,820 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year. Required: a. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base. b. Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

Under Lamar Company's job costing system, manufacturing overhead is applied to Work-in-Process Inventory using a predetermined overhead rate. During June, Lamar's transactions included the following: Direct materials issued to production \9 0,000 Indirect materials issued to production 8,000 Manufacturing overhead cost incurred 125,000 Manufacturing overhead cost applied 113,000 Direct labor cost incurred 107,000 Lamar Company had no beginning or ending inventories. What was the cost of goods manufactured for June? (CMA adapted)

The Maryland Company is a computer repair shop and had the following transactions and events during the year. Estimated overhead for the year was $175,000; estimated labor for the year was 6,000 hours. 1. Purchased materials on account, $126,000. 2. Traced materials to repair jobs $110,880; general shop materials used $9,500. 3. Labor traced to repair jobs $165,000, untraced labor was $22,200. 4. Overhead incurred (not including materials or labor): $139,600. 5. Overhead is applied to repair jobs based on labor hours. All workers were paid $30/hr. 6. Ending work-in-process consisted of one repair job with a cost of $1,976. There was no beginning work-in-process. 7. Repair jobs were billed to the customers for $476,000. Required: (a) Prepare the journal entries to record the transactions for the year. (b) Prepare the journal entry to write-off the over- or underapplied overhead to the cost of repair jobs. (c) What would Maryland's operating profit for the year?

One of the primary differences between job costing for service firms and job costing for manufacturing companies is service firms generally:

Fogel Flight Company uses a job costing system. The direct materials for Job #045391 were purchased in September and put into production in October. The job was not completed by the end of October. At the end of October, in what account would the direct materials cost assigned to Job #045391 be located?

A manufacturing company employs job costing to account for its costs. There are three production departments, and separate departmental overhead application rates are employed because the operations of the departments are so different. All jobs generally pass through all three production departments. Data regarding the hourly direct labor rates, overhead application rates, and three jobs on which work was done during the month appear below. Job 101 and Job 102 were completed during the current month. (CIA Examination adapted) Direct Labor Production Departments Rate Marufacturing overhead application rates Department 1 \ 12.00 50\% of direct materials Department 2 18.00 per machine hour Department 3 15.00 75\% of direct labor cost Beginning Work-in-Process Direct materials: Department 1 Department 2 Department 3 Direct labor hours: Department 1 Department 2 Department 3 Machine hours: Department 1 Department 2 Department 3 Job 101 Job 102 Job 103 \ 25,500 \ 32,400 \ -0 \ 40,000 \ 26,000 \ 58,0 3,000 \ 5,000 \ 4,0 -0- \ -0- \ -0- 500 400 300 200 250 350 1,500 1,800 2,500 -0- -0- -0- 1,200 1,500 2,700 1,500 1,800 2,500 Required: (a) Compute the completed costs of Job 101 and Job 102. (b) Compute the value of the Work-in-Process Inventory at the end of the month.

The Falcon Company does not maintain backup documents for its computer files. In June, some of the current data were lost, and you have been asked to help reconstruct the data. The following beginning balances on June 1 are known: Direct Materials Inventory \ 12,000 Work-in-Process Inventory 4,500 Finished Goods Inventory 11,000 Manufacturing Overhead Control 16,500 Accounts Payable 6,000 Reviewing old documents and interviewing selected employees have generated the following additional information: The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory. Also, 300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30. The Accounts Payable account is only for direct material purchases. The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000. An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June. Payroll records indicate that 5,200 direct labor-hours were recorded for June. It was verified that there were no variations in pay rates among employees during June. Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30. Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000. The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs. - What is the ending balance in the Work-in-Process Inventory on June 30?