Exam 5: Job Costing

Direct Direct Direct Materials Labour Cost Labour Hours Job 400 \ 200 \ 800 40 Job 401 250 200 10 Job 402 500 600 30 Sparkle Company uses job costing and applies overhead using an actual costing system using direct labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labour cost is $500,000 and estimated direct labour hours are 25,000. This period's actual overhead cost was $420,000, actual direct labour cost was $390,000, and actual direct labour hours were 20,000. What is the overhead allocation rate?

Because overhead costs are allocated in a job costing system they can be considered "variable" for the purpose of decision making.

Direct Direct Direct Materials Labour Cost Labour Hours Job 400 \ 200 \ 800 40 Job 401 250 200 10 Job 402 500 600 30 Sparkle Company uses job costing and applies overhead using an actual costing system using direct labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labour cost is $500,000 and estimated direct labour hours are 25,000. This period's actual overhead cost was $420,000, actual direct labour cost was $390,000, and actual direct labour hours were 20,000. What is the total manufacturing cost of Job 402?

To improve quality, many organizations adopt a variety of business practices. Which of the following is not such a practice?

Abnormal spoilage arises: I. As part of regular operations II. From out-of-control processes III. From unusual circumstances, such as flooding that interrupts work

How do managers decide whether to incur rework costs for a spoiled unit?

Direct Direct Direct Materials Labour Cost Labour Hours Job 200 \ 500 \ 800 40 Job 201 350 200 10 Job 202 1,000 600 30 The Soap Company uses job costing and applies overhead using a normal costing system using direct labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated direct labour cost is $500,000 and estimated direct labour hours are 25,000. This period's actual overhead cost was $420,000, actual direct labour cost was $390,000, and actual direct labour hours were 20,000. What is the overhead allocation rate?

Kelita's Kar Kare Kompany had the following cost and inventory data for the month: Costs incurred for the month: Direct labour \ 6,900 Indirect labour 1,500 Direct materials purchased 4,500 Factory utilities 2,200 Factory amortization 3,000 Factory supervision 1,200 Inventories: Ending Beginning Direct materials \ 1,500 \ 1,800 Work in process 4,500 4,050 Finished goods 6,000 5,250 Assume that total production costs incurred for the month were $15,000. What was the cost of goods sold?

Job costing is used to:

Accounting processes influence manager behaviour in many organizations.

Professional Other Direct Professional Labour Cost Costs Labour Hours Client 57 \ 2,000 \ 800 20 Client 58 1,000 200 10 Client 59 5,000 600 50 Bhavik's Accounting Services uses job costing and applies overhead using a normal costing system using professional labour hours as the allocation base. This period's estimated overhead cost is $400,000, estimated professional labour cost is $800,000 and estimated direct labour hours are 8,000. This period actual overhead cost was $426,400, actual direct labour cost was $820,000, and actual direct labour hours were 8,200. What is the total cost for Client 58?

Star Company's accountants estimate total overhead for each month will be $64,000. They will allocate overhead on the basis of direct labour cost. During the current month, three jobs were worked on: Job 745 Job 746 Direct material \ 36,000 \ 56,000 \ 24,000 Direct labour \ 56,000 \ 72,000 \ 40,000 Job 745 was completed and sold, Job 746 was completed and Job 747 is still in process. Budgeted direct labour cost for the month was $160,000 and actual overhead was $65,800. The amount of over- or underapplied overhead for the month was:

The total manufacturing costs incurred for the year are $200,000. Overhead cost was 60% of direct labour cost, and direct materials cost was $25,000. Direct labour cost was:

Overhead is typically allocated to jobs in a job costing system, rather than being traced directly.

In a normal costing system, which of the following costs are traced to each job? Direct Materials Direct Labour a) Yes Yes b) No Yes c) No No d) Yes No

Jerry and Damien are partners in a house-painting business. Which of the following costs is subject to the least uncertainty for a specific painting job?

For which of the following products would a job costing system be appropriate?

The first step in overhead allocation is to identify the cost object.

Direct labour:

Quality initiatives have both quantitative and qualitative benefits.