Question 1

Which of the following is the correct formula to compute the predetermined overhead rate?

Accepted Answer

A)  Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. 
B)  Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. 
C)  Actual total manufacturing overhead costs divided by estimated total units in the allocation base. 
D)  Estimated total manufacturing overhead costs divided by actual total units in the allocation base. 
A)  Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. 
B)  Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. 
C)  Actual total manufacturing overhead costs divided by estimated total units in the allocation base. 
D)  Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

Question 2

The financial records for the Harrison Manufacturing Company have been destroyed in a fire. The following information has been obtained from a separate set of books maintained by the cost accountant. The cost accountant now asks for your assistance in computing the missing amounts.

$$\begin{array}{l}
\text { Wark-in-Pracess Inventary }\
\hline \begin{array} { r r | r r } 
\text { Beg. Bal. } & 7,500 & ? & \text { Transferred Out } \
\text { Materials } & 18,000 & & \
\text { Labor } & 13,500 & & \
\text { Overhead } & 8,000 & & \
\hline \text { End. Bal. } & ? &
\end{array}
\end{array}$$
$$\begin{array}{l}
\text { Finiched Guads Inventary }\
\hline\begin{array} { r r | r r }  
\text { Beg. Bal. } & \text { ? } & ? & \text { Transferred Out } \
& & & \
\text { Trarsferred in } & 39,500 & & \
\hline \text { End. Bal. } & 4,200 &
\end{array}
\end{array}$$
-
What is the value of the ending Work-in-Process inventory balance?

Accepted Answer

A)  $0. 
B)  $4,200. 
C)  $7,500. 
D)  $8,000. 
A)  $0. 
B)  $4,200. 
C)  $7,500. 
D)  $8,000.

Question 3

Which of the following is not a characteristic of job costing?

Accepted Answer

A)  Each job is distinguishable from other jobs. 
B)  Identical units are produced on an ongoing basis. 
C)  Job cost data are used for setting prices and bids. 
D)  It is possible to compare actual costs with estimated costs. 
A)  Each job is distinguishable from other jobs. 
B)  Identical units are produced on an ongoing basis. 
C)  Job cost data are used for setting prices and bids. 
D)  It is possible to compare actual costs with estimated costs.

Question 4

The financial records for the Harrison Manufacturing Company have been destroyed in a fire. The following information has been obtained from a separate set of books maintained by the cost accountant. The cost accountant now asks for your assistance in computing the missing amounts.

$$\begin{array}{l}
\text { Work-in-Pracess Inventary }\
\hline  \begin{array} { r r | r r } 
\text { Beg. Bal. } & 7,500 & ? & \text { Transferred Out } \
\text { Materials } & 18,000 & & \
\text { Labor } & 13,500 & & \
\text { Overhead } & 8,000 & & \
\hline \text { End. Bal. } & ? &
\end{array}
\end{array}$$
$$\begin{array}{l}
\text { Finiched Guads Inventary }\ 
\hline\begin{array} { r r | r r } 
\text { Beg. Bal. } & \text { ? } & ? & \text { Transferred Out } \
& & & \
\text { Trarsferred in } & 39,500 & & \
\hline \text { End. Bal. } & 4,200 &
\end{array}
\end{array}$$
-
What is the amount of the materials purchased?

Accepted Answer

A)  $14,400. 
B)  $16,400. 
C)  $18,000. 
D)  $19,600. 
A)  $14,400. 
B)  $16,400. 
C)  $18,000. 
D)  $19,600.

Question 5

Describe the difference between normal costing, actual costing, and standard costing.

Accepted Answer

Normal costing assigns actual direct cos

Question 6

Stock Co. uses a job costing system. The following debits (credits) appeared in Stock's work-in-process account for the month of April:
$\begin{array}{clc}
\text { April } & \text { Description }& \text { Amount }\
1 & \text { Balance } &\$4,000\
30 & \text { Direct materials } &24,000\
30 & \text { Direct labor } &16,000\
30 & \text { Factory overhead }&12,800 \
30 & \text { To finished goods }&(48,000)
\end{array}$

Stock applies overhead to production at a predetermined rate of 80% of direct labor cost. Job No. 5, the only job still in process on April 30 has been charged with direct labor of $2,000. What was the amount of direct materials charged to Job No. 5? (CPA adapted)

Accepted Answer

A)  $3,000. 
B)  $5,200. 
C)  $8,800. 
D)  $24,000. 
A)  $3,000. 
B)  $5,200. 
C)  $8,800. 
D)  $24,000.

Question 7

It is unethical to intentionally charge costs to the wrong job.

Accepted Answer

A) True 
 B)False

Question 8

The following events took place at a manufacturing company for the current year:
(1) Purchased $95,000 in direct materials.
(2) Incurred labor costs as follows: (a) direct, $56,000 and (b) indirect, $13,600.
(3) Other manufacturing overhead was $107,000, excluding indirect labor.
(4) Transferred 80% of the materials to the manufacturing assembly line.
(5) Completed 65% of the Work-in-Process during the year.
(6) Sold 85% of the completed goods.
(7) There were no beginning inventories.
What is the journal entry to record the direct labor costs for the period?
$$\begin{array} { | l | l | c | c | } 
\hline \text { A } & \text { Labor Irventory } & \mathrm { XXX } & \
\hline & \text { Wages Payable } & & \mathrm { XXX } \
\hline
\end{array}$$
$$\begin{array} { | l | l | l | l | } 
\hline \text { B. } & \text { Work-In-Process Irventory } & \mathrm { XXX } & \
\hline & \text { Wages Payable } & & \mathrm { XXX } \
\hline
\end{array}$$
$$\begin{array} { | l | l | l | l | } 
\hline \text { C. } & \text { Marnufacturing Overhead Control } & \mathrm { XXX } & \
\hline & \text { Wages Payable } & & \mathrm { XXX } \
\hline
\end{array}$$
$$\begin{array} { | l | l | c | c | } 
\hline \text { D. } & \text { Wages Expense } & \mathrm { XXX } & \
\hline & \text { Cash } & & \mathrm { XXX } \
\hline
\end{array}$$

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 9

Ramos Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. Data for the most recently completed year appear below:
 
$\begin{array}{ll}
\text {Estimates made at the begirming of the year:}\
\text { Estimated labor-hours } & 24,000 \
\text { Estimated variable manufacturing overhead } & \$  6.86 \text { per labor-hour } \
\text { Estimated total fixed manufacturing overhead } & \$ 394,560 \
\text { Actual labor-hours for the year } & 24,500
\end{array}$
 
Required:
Compute the company's predetermined overhead rate for the recently completed year.

Accepted Answer

Estimated total manufacturing

Question 10

Under Eagle Co.'s job costing system, manufacturing overhead is applied to Work-in-Process using a predetermined annual overhead rate. During February, Eagle's transactions included the following:
$\begin{array}{lr}
\text { Direct materials issued to production } & \$90,000 \
\text { Indirect materials issued to production } & 8,000 \
\text { Manufacturing overhead incurred } &125,000 \
\text { Manufacturing overhead applied } & 113,000 \
\text { Direct labor costs } & 107,000 \
\end{array}$
Eagle had neither beginning nor ending inventory in Work-in-Process Inventory. What was the cost of jobs completed in February? (CPA adapted)

Accepted Answer

A)  $302,000. 
B)  $310,000. 
C)  $322,000. 
D)  $330,000. 
A)  $302,000. 
B)  $310,000. 
C)  $322,000. 
D)  $330,000.

Question 11

Harkin Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. Data for the upcoming year appear below:
 $\begin{array}{llc}
\text { Estimated machine-hours } & 73,000 \
\text { Estimated variable manufacturing overhead } & \$ 3.49 \text { per machine-hour } \
\text { Estimated total fixed manufacturing overhead } & \$ 838,770
\end{array}$
 
Required:
Compute the company's predetermined overhead rate.

Accepted Answer

Estimated total manufacturing overhead =

Question 12

The actual manufacturing overhead incurred at Liberty Industries during May was $59,000, while the manufacturing overhead applied to Work-in-Process was $74,000. The company's Cost of Goods Sold was $289,000 prior to closing out its Manufacturing Overhead account. The company closes out its Manufacturing Overhead account to Cost of Goods Sold. Which of the following statements is true?

Accepted Answer

A)  Manufacturing overhead was overapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $274,000. 
B)  Manufacturing overhead was underapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $274,000. 
C)  Manufacturing overhead was overapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $304,000. 
D)  Manufacturing overhead was underapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $304,000. 
A)  Manufacturing overhead was overapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $274,000. 
B)  Manufacturing overhead was underapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $274,000. 
C)  Manufacturing overhead was overapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $304,000. 
D)  Manufacturing overhead was underapplied by $15,000; Cost of Goods Sold after closing out the Manufacturing Overhead account is $304,000.

Question 13

The following are Margin Co.'s production costs for December:
$\begin{array}{lrr}
  \text { Drrect Materials  } &\$100,000\
 \text {  Direct Labor } &90,000\
 \text { Factory Overhead } &4,000\
\end{array}$

What amount of costs should be traced to specific products in the production process? (CPA adapted)

Accepted Answer

A)  $194,000. 
B)  $190,000. 
C)  $100,000. 
D)  $90,000. 
A)  $194,000. 
B)  $190,000. 
C)  $100,000. 
D)  $90,000.

Question 14

Complex jobs that take multiple time periods and require the work of many different departments, divisions, or subcontractors are called:

Accepted Answer

A)  clients. 
B)  projects. 
C)  customers. 
D)  contracts. 
A)  clients. 
B)  projects. 
C)  customers. 
D)  contracts.

Question 15

Cherry Company is a manufacturing firm that uses job costing. The company's inventory balances were as follows at the beginning and end of the year:
 $$\begin{array} { l r r } 
& \begin{array} { c } 
\text { Begirning } \
\text { Balance }
\end{array} & \text { Ending Balance } \
\text { Raw materials } & \$ 11,000 & \$ 15,000 \
\text { Work-in-Process } & 32,000 & 14,000 \
\text { Finished goods } & 108,000 & 123,000
\end{array}$$ 
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 17,000 machine-hours and incur $272,000 in manufacturing overhead cost. The following transactions were recorded for the year:
? Raw materials were purchased, $416,000.
? Raw materials were requisitioned for use in production, $412,000 ($376,000 direct and $36,000 indirect).
? The following employee costs were incurred: direct labor, $330,000; indirect labor, $69,000; and administrative salaries, $157,000.
? Selling costs, $113,000.
? Factory utility costs, $29,000.
? Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities.
? Manufacturing overhead was applied to jobs. The actual level of activity for the year was 15,000 machine-hours.
? Sales for the year totaled $1,282,000.
Required:
a. Prepare a schedule of cost of goods manufactured in good form.
b. Was the overhead underapplied or overapplied? By how much?
c. Prepare an income statement for the year in good form. The company closes any underapplied or overapplied overhead to Cost of Goods Sold.

Accepted Answer

a.Schedule of cost of goods manufactured

Question 16

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead Control and credits Work-in-Process inventory.

Accepted Answer

A) True 
 B)False

Question 17

The Focus 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 are known:
 $$\begin{array} { l r } 
\text { Direct materials irventory } & \$ 24,000 \
\text { Work-in-process inventory } & 9,000 \
\text { Finished goods inventory } & 22,000 \
\text { Manufacturing overhead control } & 33,000 \
\text { Accounts payable } & 12,000
\end{array}$$ 
Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $5,200 were included in the June 30 Work-in-Process Inventory. Also, 300 direct labor-hours had been paid at $12.00 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 $16,000. An analysis of canceled checks indicated payments of $80,000 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 $32,000 on June 30.
Another record kept manually indicates that the Cost of Goods Sold in June totaled $168,000.
The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $360,000 in manufacturing overhead costs.
Required:
(a) Compute the Cost of Goods Manufactured.
(b) Compute the ending Work-in-Process Inventory balance.
(c) Compute the ending Direct Materials Inventory balance.

Accepted Answer

Overhead rate = $360,000/60,000 = $6/hr.

Question 18

Which of the following approaches allocates overhead by multiplying an actual overhead rate × actual activity?

Accepted Answer

A)  Actual costing. 
B)  Normal costing. 
C)  Regression costing. 
D)  Standard costing. 
A)  Actual costing. 
B)  Normal costing. 
C)  Regression costing. 
D)  Standard costing.

Question 19

The journal entry to record the completion of a job in a job costing system is:
$$\begin{array} { | l | l | l | l | } 
\hline \text { A } & \text { Finished Goods Inventory } & \mathrm { xxx } & \
\hline & \text { Materials Inventory } & & x \mathrm { xxx } \
\hline
\end{array}$$
$$\begin{array} { | l | l | c | c | } 
\hline \text { B. } & \text { Work-In-Process Inventory } & x x & \
\hline & \text { Applied Manufacturing Overhead } & & x x x \
\hline
\end{array}$$
$$\begin{array} { | l | l | l | l | } 
\hline \text { C. } & \text { Manufacturing Overhead Control } &  \text { x x x} & \
\hline & \text { Finished Goods Inventory } & & \text {  x x x }\
\hline
\end{array}$$
$$\begin{array} { | l | l | l | l | } 
\hline \text { D. } & \text { Finished Goods Inventory } & \text { x x x }& \
\hline & \text { Work-In-Process Inventory } & & \text { x x x} \
\hline
\end{array}$$

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 20

In the context of job costing, what are projects? What additional costing issues are there with projects?

Accepted Answer

Projects are complex jobs that often tak

Which of the following is the correct formula to compute the predetermined overhead rate?

Which of the following is not a characteristic of job costing?

Describe the difference between normal costing, actual costing, and standard costing.

It is unethical to intentionally charge costs to the wrong job.

The following are Margin Co.'s production costs for December: Drrect Materials \1 00,000 Direct Labor 90,000 Factory Overhead 4,000 What amount of costs should be traced to specific products in the production process? (CPA adapted)

Complex jobs that take multiple time periods and require the work of many different departments, divisions, or subcontractors are called:

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead Control and credits Work-in-Process inventory.

Which of the following approaches allocates overhead by multiplying an actual overhead rate × actual activity?

In the context of job costing, what are projects? What additional costing issues are there with projects?

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

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Exam 7: Job Costing

Which of the following is the correct formula to compute the predetermined overhead rate?

Which of the following is not a characteristic of job costing?

Describe the difference between normal costing, actual costing, and standard costing.

It is unethical to intentionally charge costs to the wrong job.

The following are Margin Co.'s production costs for December: Drrect Materials \1 00,000 Direct Labor 90,000 Factory Overhead 4,000 What amount of costs should be traced to specific products in the production process? (CPA adapted)

Complex jobs that take multiple time periods and require the work of many different departments, divisions, or subcontractors are called:

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead Control and credits Work-in-Process inventory.

Which of the following approaches allocates overhead by multiplying an actual overhead rate × actual activity?

In the context of job costing, what are projects? What additional costing issues are there with projects?

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters