Exam 5: Job Costing

Lucy Sportswear manufactures a specialty line of T-shirts using a job order cost system. During March, the following costs were incurred in completing Job ICU2: direct materials $13,700, direct labour $4,800, administrative $1,400, and selling $5,600. Factory overhead was allocated at the rate of $25 per machine hour and Job ICU2 required 800 machine hours. If Job ICU2 resulted in 7,000 good shirts, the cost of goods sold per unit would be:

Direct materials are 30% of the year's manufacturing costs incurred. The beginning work-in-process is 125% of the ending work-in-process. Labour and overhead costs total $56,000 and the cost of goods manufactured is $90,000. Direct materials cost is:

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. Assuming overhead was $100 underapplied and that this amount is considered immaterial, the final adjusted balance of cost of goods sold is:

Manufacturers may track scrap to determine whether:

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 overhead allocation rate?

Although they may be significant in amount, quality costs are often measured imprecisely.

Which of the following costs are charged to overhead? I. Scrap traced to individual jobs II. Normal spoilage occurring periodically as a regular part of all jobs III. Scrap common to all jobs

Reworked units can always be sold at the regular market price.

Normal costing overhead rates are developed at the beginning of each period based on the:

Actual costing and normal costing are two different names for the same overhead allocation system.

The following activity took place in the past year: Raw materials purchased \ 160,000 Raw materials used (90\% direct, 10\% indirect) \ 140,000 Factory utility costs incurred \ 40,000 Salaries and wages incurred (80\% direct, 10\% indirect, 10\% administrative) \ 250,000 Factory amortization \ 25,000 Amortization on sales staff cars \ 12,000 Estimated overhead allocation rate 52\% of direct labour cost Cost of jobs completed \ 300,000 The under- or overapplied overhead for the year was

A firm had the following balances at the end of the period: Work in process \ 400 Finished goods 600 Cost of goods sold 1,000 Overapplied overhead 400 It was determined that the overapplied overhead should be treated as immaterial. After any adjustments for overapplied overhead are made, the balance of work in process would be:

The total cost of Job No. 195 was $1,500. Direct materials for this job amounted to $660. Overhead is allocated at the rate of 40% of direct labour cost. The overhead cost on this job was:

In normal costing systems, overhead is allocated using the following formula: normal allocation base volume / normal allocation rate.

Barron's Corp. manufactures custom made wire baskets used to hold computer components in computer manufacturing operations. Wages: Machine operators \ 400,000 Maintenance workers 45,000 Factory supervisors 90,000 Materials used: Metal wire \ 600,000 Lubricant for oiling machines 5,000 Clear plastic coating 420,000 Barron's direct labour cost amounted to:

Direct materials are 30% of the year's manufacturing costs incurred. The beginning work-in-process is 125% of the ending work-in-process. Labour and overhead costs total $56,000 and the cost of goods manufactured is $90,000. Assume the total manufacturing costs incurred were $80,000. The cost of the beginning work in process is:

Identifying a cost driver is the first step in allocating overhead in a job costing system.

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 total manufacturing cost of Job 400?

Direct Direct Direct Materials Labour Cost Labour Hours Job 200 \ 500 \ 800 40 Job 201 350 200 10 Job 202 1,000 600 30 Smith Fabricating uses job costing and applies overhead using a normal costing system and uses direct labour cost as the allocation base. This period's estimated overhead cost is $100,000 and estimated direct labour cost of $50,000 and 2,500 direct labour hours. What is the overhead allocation rate?

Scrap can be planned for and guarded by setting up a: