Exam 7: Job Costing

Northface Company applies overhead based upon labor-hours. Budgeted factory overhead was $910,000 and budgeted labor-hours were 32,500. Actual factory overhead was $893,675 and actual labor-hours were 31,560. Required: a. Compute the overhead application rate. b. Compute the amount of overhead applied to production. c. Determine the amount of over- or underapplied overhead.

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 is the over- or underapplied overhead?

Before prorating the manufacturing overhead costs at the end of 2020, the Cost of Goods Sold and Finished Goods Inventory accounts had applied overhead costs of $57,500 and $20,000 in them, respectively. There was no Work-in-Process at the beginning or end of 2020. During the year, manufacturing overhead costs of $74,000 were actually incurred. The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2020. - If the under- or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts, what will be the Cost of Goods Sold balance after the proration? (rounded to the nearest whole dollar)

Which of the following events or transactions will not result in manufacturing overhead being applied to production?

Kid's World Manufacturing Company is a manufacturer of furnishings for infants and children. The company uses job costing and employs a full absorption accounting method for cost accumulation. Kid's World Work-in-Process Inventory on April 30 consisted of the following jobs: Accumulated Job No. Items Units Cost CBSI02 Cribs 20,000 \ 900,000 PLP086 Playpens 15,000 420,000 DRS114 Dressers 25,000 250,000 Total \ 1,570,000 Kid's World applies manufacturing overhead on the basis of direct labor-hours. The company's estimated manufacturing overhead for the period ending May 31 totals $4,500,000; the company estimated it would use 600,000 direct labor-hours during the year. At the end of April, the balance in Kid's World Materials Inventory, which includes both materials and purchased parts, was $668,000. Additions to, and requisitions from, the materials inventory during the month of May included the following: Purchased Purchased Materials Parts Requisitions: \ 242,000 \3 96,000 Job CBS102 51,000 104,000 Job PLP086 3,000 10,800 Job DRS114 124,000 87,000 Job STR077 (10,000 strollers) 62,000 81,000 Job CRG096 (5,000 carriages) 65,000 187,000 During the month of May, Kid's World factory payroll consisted of the following: Hours Cost Job CBS102 12,000 \ 122,400 Job PLP086 4,400 43,200 Job DRS114 Job STR077 19,500 200,500 Job CRG096 3,500 30,000 Indirect supervision 14,000 138,000 Total Listed below are the jobs that were completed and the units that were sold during the month of May. Job No. Items Quaritity Corripleted CBS102 Cribs 20,000 PLP086 Playpers 15,000 STR077 Strollers 10,000 CRG096 Carriages 5,000 Required: (a) Compute the value of Kid's World Work-in-Process Inventory on May 31. (b) Compute the value of Kid's World Cost of Goods Manufactured for May.

The journal entry to write-off an insignificant underapplied overhead balance at the end of an accounting period is: A. Applied Manufacturing Overhead Cost of Goods Sold Manufacturing Overhead Control B. Applied Manufacturing Overhead Cost of Goods Sold Manufacturing Overhead Control C. Applied Manfacturing Overhead Work-In-Process Inventory Finished Goods Inventory Cost of Goods Sold Manufacturing Overhead Control D. Applied Manufacturing Overhead Work-In-Process Inventory Finished Goods Inventory Cost of Goods Sold Manufacturing Overhead Control

Halston Manufacturing uses actual costing. The following events took place during 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. Required: (a) Determine the ending Direct Materials Inventory balance. (b) Determine the ending Work-in-Process Inventory balance. (c) Determine the ending Finished Goods Inventory balance. (d) Determine the Cost of Goods Manufactured.

Most major projects require budget and completion stage revisions at certain intervals due to their inherent uncertainty.

Which of the following approaches allocates overhead by multiplying a predetermined rate × standard activity?

A job is a product or service that can be easily and conveniently distinguished from other products/services.

The journal entry to record the actual manufacturing overhead costs for indirect materials is: A Marufacturing Overhead Control Materials Irventory B. Materials Irventory Applied Marufacturing Overhead C. Marufacturing Overhead Control Finished Goods Irventory D. Work-In-Process Irventory Applied Maruffacturing Overhead

Santos Company is a manufacturing firm that uses job costing. At the beginning of the year, the company's inventory balances were as follows: Raw materials \ 24,000 Work-in-Process 73,000 Finished goods 27,000 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 45,000 machine-hours and incur $180,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $416,000. b. Raw materials were requisitioned for use in production, $420,000 ($380,000 direct and $40,000 indirect). c. The following employee costs were incurred: direct labor, $414,000; indirect labor, $60,000; and administrative salaries, $212,000. d. Selling costs, $141,000. e. Factory utility costs, $20,000. f. Depreciation for the year was $81,000 of which $73,000 is related to factory operations and $8,000 is related to selling, general, and administrative activities. g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 48,000 machine-hours. h. The cost of goods manufactured for the year was $1,004,000. i. Sales for the year totaled $1,416,000 and the costs on the job cost sheets of the goods that were sold totaled $989,000. j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold. Required: Prepare the appropriate journal entry for each of the items above (a) through (j). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

Manufacturing overhead applied on the basis of direct labor-hours was $120,000, while actual manufacturing overhead incurred was $124,000 for the month of April. Which of the following is always true given the statement above?

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. Wark-in-Pracess Inventary Beg. Bal. 7,500 ? Transferred Out Materials 18,000 Labor 13,500 Overhead 8,000 End. Bal. ? Finiched Guads Inventary Beg. Bal. ? ? Transferred Out Trarsferred in 39,500 End. Bal. 4,200 - What is the value of the beginning Finished Goods Inventory?

At the beginning of the year, manufacturing overhead for the year was estimated to be $267,500. At the end of the year, actual direct labor-hours for the year were 22,100 hours, the actual manufacturing overhead for the year was $262,500, and manufacturing overhead for the year was overapplied by $13,750. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used to calculate the predetermined overhead rate was:

Aardvark Inc. has provided the following data for the month of November. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Work-in- Finished Cost of Goods Process Goods Sold Total Direct materials \ 3,500 \ 11,200 \ 51,800 \6 6,500 Direct labor 3,260 14,400 66,600 84,260 Manufacturing 3,840 7,680 36,480 48,000 overhead applied Total \1 0,600 \3 3,280 \1 54,880 \1 98,760 Manufacturing overhead for the month was underapplied by $6,000. The company allocates any underapplied or overapplied overhead among Work-in-Process, Finished Goods, and Cost of Goods Sold at the end of the month on the basis of the overhead applied during the month in those accounts. Required: Determine the cost of Work-in-Process, Finished Goods, and Cost of Goods Sold AFTER allocation of the underapplied or overapplied overhead for the period.

During July, Morris Corporation purchased $76,000 of raw materials on credit to add to its raw materials inventory. A total of $81,000 of raw materials was requisitioned from the storeroom for use in production. These requisitioned raw materials included $5,000 of indirect materials. Required: Prepare journal entries to record the purchase of materials and their use in production.

In a job costing system, direct material cost is ordinarily debited to:

Duran Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $224,580. At the end of the year, actual direct labor-hours for the year were 18,200 hours, manufacturing overhead for the year was underapplied by $12,100, and the actual manufacturing overhead was $219,580. The predetermined overhead rate for the year must have been closest to:

The Shotz Company had the following transactions and events during its first year of operations. Estimated overhead for the year was $770,000; estimated direct labor cost for the year was $350,000. 1. Purchased materials on account, $567,000. 2. Requisitioned materials for production as follows: direct materials - 85 percent of purchases, indirect materials - 12 percent of purchases. 3. Direct labor for production is $331,000, indirect labor is $125,000. 4. Overhead incurred (not including materials or labor): $529,000. 5. Overhead is applied to production based on direct labor cost at the rate of ________. 6. Goods costing $976,000 were completed during the period. 7. Goods costing $513,200 were sold on account for $776,000. Required: (a) Prepare the journal entries to record the transactions for the year. (b) Prepare the journal entry to prorate the over- or underapplied overhead to the appropriate accounts.