Exam 7: Job Costing

The journal entry to record actual manufacturing overhead for indirect materials debits Manufacturing Overhead Control and credits Accounts Payable.

Job 7890 was recently completed. The following data have been recorded on its job cost sheet: Direct materials \ 45,000 Direct labor-hours 630 dabor-hours Direct labor wage rate \ 13 per labor-hour Machine-hours 390machine-hours Number of urits completed 3,000 inits The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $12 per machine-hour. Required: Compute the unit product cost that would appear on the job cost sheet for Job 7890.

The journal entry to write-off a significant underapplied overhead balance at the end of an accounting period is: A Applied Marnufacturing Overhead Cost of Goods Sold Marnufacturing Overhead Control B. Applied Marufacturing Overhead Cost of Goods Sold Marnufacturing Overhead Control C. Applied Manufacturing Overhead Work-In-Process Irventory Finished Goods Irventory Cost of Goods Sold Manufacturing Overhead Control D. Applied Marmufacturing Overhead Work-In-Process Irventory Firished Goods Irventory Cost of Goods Sold Maruffacturing Overhead Control

Which of the following documents would be used as the basis for posting to the direct labor section of the job cost sheet?

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 company's Cost of Goods Sold?

In a traditional job costing system, the issuance of indirect materials to a production department increases: (CPA adapted)

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours. Budgeted factory overhead was $232,750, budgeted machine-hours were 17,500. Actual factory overhead was $227,830, actual machine-hours were 16,150. -How much overhead would be applied to production?

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

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 amount of direct materials purchased during June?

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 is the predetermined manufacturing overhead rate per direct labor hour for the year?

If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base, it is using:

The Duggart 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: Determine the ending balances for: (a) Materials Inventory (b) Work-in-Process Inventory (c) Finished Goods Inventory

Fortune Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. On October 1 , the estimates for the month were: Manufacturing overhead \1 7,000 Direct labor-hours 13,600 During October; the actual results were: Manufacturing overhead \1 8,500 Direct labor-hours 12,000 The cost records for October will show:

During April, Orbitz Corporation incurred $64,000 of actual manufacturing overhead costs. During the same period, the manufacturing overhead applied to Work-in-Process was $66,000. Required: Prepare journal entries to record the incurrence of manufacturing overhead and the application of manufacturing overhead to Work-in-Process.

On October 1, the general ledger of Morgan Industries had the following accounts and balances: Materials inventory \ 19,200 Work-in-process inventory 48,750 Finished goods inventory 8,100 Manufacturing overhead (overapplied) 2,000 The subsidiary ledgers had the following information on October 1: During October, the following costs were incurred on account: Materials \ 46,500 Factory labor 49,000 Manufacturing overhead 56,350 A summary of the materials requisition slips and the labor time tickets for the month revealed the following distribution: Materials Applicable To Requisitions Time Tickets Job B81 \ 8,000 \ 4,000 Job B83 5,100 1,700 Job B84 8,600 10,500 Job B85 19,900 16,750 Job B86 12,750 ? General Use Overhead is applied based upon direct labor cost. Jobs B81, B83, and B84 were for 8,000, 6,000 and 4,800 units of product, respectively, and were completed during October. Jobs B80, B81, B82, and B83 were sold on account for $150,000. Required: Prepare T-accounts for a job costing system, posting the beginning balances and all transactions for the month. Clearly indicate the ending balances for the accounts and label the 'cost of goods manufactured' and 'cost of goods sold' amounts.

If a company multiplies its actual overhead rate by the actual activity level of its allocation base, it is using:

Why is control of materials important from a managerial planning perspective?

Carson Inc. has provided the following data for the month of May. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Manufacturing overhead for the month was underapplied by $10,000. 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. The journal entry to record the allocation of any underapplied or overapplied overhead for May would include a:

Pigot Corporation uses job costing and has two production departments, M and A. Budgeted manufacturing costs for the year are as follows: Dept. M Dept. A Direct materials \ 700,000 \ 100,000 Direct labor 200,000 800,000 Factory overhead 600,000 400,000 The actual direct materials and direct labor costs charged to Job. No. 432 during the year were as follows: Direct materials \2 5,000 Direct labor: Department M \8 ,000 Department A 20,000 Pigot applies manufacturing overhead to production orders on the basis of direct labor cost using departmental rates predetermined at the beginning of the year based on the annual budget. The total cost associated with Job. No. 432 for the year should be:

Which of the following actions do not cause an impropriety in job costing?