Question 1

If actual overhead is greater than applied manufacturing overhead then manufacturing overhead is:

Accepted Answer

A)  underapplied. 
B)  overapplied. 
C)  a loss on the income statement under "Other Expenses and Losses." 
D)  considered a miscellaneous expense. 
A)  underapplied. 
B)  overapplied. 
C)  a loss on the income statement under "Other Expenses and Losses." 
D)  considered a miscellaneous expense.

Question 2

Cost of goods manufactured equals $85000 for 2017. Finished goods inventory is $2000 at the beginning of the year and $5500 at the end of the year. Beginning and ending work in process for 2017 are $4000 and $5000 respectively. How much is cost of goods sold for the year?

Accepted Answer

A)  $87500 
B)  $83000 
C)  $81500 
D)  $88500 
A)  $87500 
B)  $83000 
C)  $81500 
D)  $88500

Question 3

In a job order cost system a credit to Manufacturing Overhead will be accompanied by a debit to

Accepted Answer

A)  Cost of Goods Manufactured. 
B)  Finished Goods Inventory. 
C)  Work in Process Inventory. 
D)  Raw Materials Inventory. 
A)  Cost of Goods Manufactured. 
B)  Finished Goods Inventory. 
C)  Work in Process Inventory. 
D)  Raw Materials Inventory.

Question 4

Cost of raw materials is debited to Raw Materials Inventory when the

Accepted Answer

A)  materials are ordered. 
B)  materials are received. 
C)  materials are put into production. 
D)  bill for the materials is paid. 
A)  materials are ordered. 
B)  materials are received. 
C)  materials are put into production. 
D)  bill for the materials is paid.

Question 5

A job order cost accounting system is fully integrated into the general ledger of a company. Identify the major general ledger accounts used in a job order cost system. Explain how manufacturing costs flow through these accounts so that inventories may be costed and income determined when goods are sold.

Accepted Answer

When a job order cost accounting system

Question 6

If manufacturing overhead has been underapplied during the year the adjusting entry at the end of the year will show a

Accepted Answer

A)  debit to Manufacturing Overhead. 
B)  credit to Cost of Goods Sold. 
C)  debit to Work in Process Inventory. 
D)  debit to Cost of Goods Sold. 
A)  debit to Manufacturing Overhead. 
B)  credit to Cost of Goods Sold. 
C)  debit to Work in Process Inventory. 
D)  debit to Cost of Goods Sold.

Question 7

Madison Inc. uses job order costing for its brand new line of sewing machines. The cost incurred for production during 2017 totaled $18000 of materials $9000 of direct labor costs and $6000 of manufacturing overhead applied. The company ships all goods as soon as they are completed which results in no finished goods inventory on hand at the end of any year. Beginning work in process totaled $15000 and the ending balance is $9000. During the year the company completed 25 machines. How much is the cost per machine?

Accepted Answer

A)  $1080 
B)  $1560 
C)  $1320 
D)  $1920 
A)  $1080 
B)  $1560 
C)  $1320 
D)  $1920

Question 8

Grant Marwick and Associates a CPA firm uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audit jobs conducted during November. $\begin{array}{lrrr}
 & \underline{\text { Rondelli }} & \underline{\text { Preston }} & \underline{\text { Lopez }}\
\text { Direct materials }& \$ 900 & \$ 600 & \$ 300 \
\text { Auditor labor costs } & \$ 5,900 & \$ 6,600 & \$ 3,700 \
\text { Auditor hours } &66&88&45
\end{array}$

Overhead costs are applied to jobs on the basis of auditor hours and the predetermined overhead rate is $50 per auditor hour. The Rondelli job is the only incomplete job at the end of November. Actual overhead for the month was $10500.
Instructions
(a) Determine the cost of each job.
(b) Indicate the balance of the Work in Process account at the end of November.
(c) Calculate the ending balance of the Manufacturing Overhead account for November.

Accepted Answer

(a)
@#LAT-DLM&

(b) The Rondelli job is the only i

Question 9

In a job order cost accounting system the Raw Materials Inventory account is

Accepted Answer

A)  an expense. 
B)  a control account. 
C)  not used. 
D)  a period cost. 
A)  an expense. 
B)  a control account. 
C)  not used. 
D)  a period cost.

Question 10

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

Accepted Answer

A) True 
 B)False

Question 11

The existence of under- or overapplied overhead at the end of the year:

Accepted Answer

A)  requires an adjustment to Cost of Goods Sold. 
B)  indicates that an error has been made. 
C)  requires a retroactive adjustment to the cost of all jobs completed. 
D)  is written off as a bad estimate expense. 
A)  requires an adjustment to Cost of Goods Sold. 
B)  indicates that an error has been made. 
C)  requires a retroactive adjustment to the cost of all jobs completed. 
D)  is written off as a bad estimate expense.

Question 12

For Wilton Company the predetermined overhead rate is 70% of direct labor cost. During the month $720000 of factory labor costs are incurred of which $200000 is indirect labor. Actual overhead incurred was $360000. The amount of overhead debited to Work in Process Inventory should be:

Accepted Answer

A)  $364000 
B)  $360000 
C)  $504000 
D)  $520000 
A)  $364000 
B)  $360000 
C)  $504000 
D)  $520000

Question 13

A process cost system would most likely be used by a company that makes

Accepted Answer

A)  motion pictures. 
B)  repairs to automobiles. 
C)  breakfast cereal. 
D)  college graduation announcements. 
A)  motion pictures. 
B)  repairs to automobiles. 
C)  breakfast cereal. 
D)  college graduation announcements.

Question 14

People Carrier Systems Inc. (PCS) modifies vans that seat 15-20 people by adding additional safety features or wheelchair ramps. Most of its customers are cities and counties who use the vans to transport school children the elderly or the handicapped. The company has specialized in a no-frills approach emphasizing safety high quality and low cost. The company's president was quoted as saying "Let the other guys make a van pretty. We get people where they need to go-faster better and cheaper than anybody else."
The company obtains jobs by being the lowest bidder in a sealed bidding process. Recently the company was solicited by a top-10 college to submit a bid for a van to be used by its athletic team. Some specialized items were required such as the school's logo on the outside of the van and the vinyl seats had to be covered in school colors. The company submitted a bid and was very surprised to obtain it.
When the job was being prepared the job manager pointed out that several extra costs could result in this job showing a loss. The boss an ardent supporter of sports in general and this team in particular told the manager to just record the standard labor and overhead cost for this job. He says that they could use the preset rate for specialized jobs and increase the overhead application rate (used in submitting bids) by 5% for future routine jobs. "After all" he says "nobody else comes close to our price anyway. This could start a whole new line of business for us."
Required:
1. Who are the stakeholders in the decision to increase overhead for routine jobs?
2. Is the decision to subsidize special jobs by increasing the overhead rate on routine jobs ethical? Briefly explain.

Accepted Answer

1. The stakeholders include:
@#LAT-DLM&The employe

Question 15

At the end of the year underapplied overhead is usually credited to Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about under- or overapplied manufacturing overhead is correct?

Accepted Answer

A)  After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted Manufacturing Overhead will have a zero balance. 
B)  When Manufacturing Overhead has a credit balance overhead is said to be under-applied. 
C)  At the end of the year under- or overapplied overhead is eliminated by a closing entry. 
D)  When annual financial statements are prepared overapplied overhead is reported in current liabilities. 
A)  After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted Manufacturing Overhead will have a zero balance. 
B)  When Manufacturing Overhead has a credit balance overhead is said to be under-applied. 
C)  At the end of the year under- or overapplied overhead is eliminated by a closing entry. 
D)  When annual financial statements are prepared overapplied overhead is reported in current liabilities.

Question 17

Usually under- or overapplied overhead is considered to be an adjustment to

Accepted Answer

A)  work in process. 
B)  finished goods. 
C)  finished goods and cost of goods sold. 
D)  cost of goods sold. 
A)  work in process. 
B)  finished goods. 
C)  finished goods and cost of goods sold. 
D)  cost of goods sold.

Question 18

Chmelar Manufacturing Company developed the following data: $\begin{array}{lr}
\text { Beginning work in process inventory } & 120,000 \
\text { Direct materials used } & 720,000 \
\text { Actual overhead } & 840,000 \
\text { Overhead applied } & 810,000 \
\text { Cost of goods manufactured } & 1,920,000 \
\text { Ending work in process } & 90,000
\end{array}$ How much are total manufacturing costs for the period?

Accepted Answer

A)  $2370000 
B)  $1890000 
C)  $1650000 
D)  $1830000 
A)  $2370000 
B)  $1890000 
C)  $1650000 
D)  $1830000

Question 19

Factory labor costs

Accepted Answer

A)  accumulate in advance of utilization. 
B)  accumulate in a control account. 
C)  include sick pay earned by factory workers. 
D)  accumulate in the Factory Labor Expense account. 
A)  accumulate in advance of utilization. 
B)  accumulate in a control account. 
C)  include sick pay earned by factory workers. 
D)  accumulate in the Factory Labor Expense account.

Question 20

Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows:
Actual manufacturing overhead $80000
Estimated manufacturing overhead $75000
Direct labor hours incurred 4800
Direct labor hours estimated 5000
Instructions
Compute (a) the predetermined overhead rate and (b) the amount of applied manufacturing overhead.

Accepted Answer

(a) Predetermined overhead rat

Exam 20: Job Order Costing

If actual overhead is greater than applied manufacturing overhead then manufacturing overhead is:

Cost of goods manufactured equals $85000 for 2017. Finished goods inventory is $2000 at the beginning of the year and $5500 at the end of the year. Beginning and ending work in process for 2017 are $4000 and $5000 respectively. How much is cost of goods sold for the year?

In a job order cost system a credit to Manufacturing Overhead will be accompanied by a debit to

Cost of raw materials is debited to Raw Materials Inventory when the

If manufacturing overhead has been underapplied during the year the adjusting entry at the end of the year will show a

In a job order cost accounting system the Raw Materials Inventory account is

Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.

The existence of under- or overapplied overhead at the end of the year:

For Wilton Company the predetermined overhead rate is 70% of direct labor cost. During the month $720000 of factory labor costs are incurred of which $200000 is indirect labor. Actual overhead incurred was $360000. The amount of overhead debited to Work in Process Inventory should be:

A process cost system would most likely be used by a company that makes

At the end of the year underapplied overhead is usually credited to Cost of Goods Sold.

Which of the following statements about under- or overapplied manufacturing overhead is correct?

Usually under- or overapplied overhead is considered to be an adjustment to

Factory labor costs

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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