Exam 4: Job Costing

Humming Company manufactures high quality musical instruments for professional musicians.The company estimated that it would incur $120,000 in factory overhead costs and 8,000 direct labor-hours for the year.The April 1 balances in the inventory accounts follow: Materials inventory \ 27,000 Work-in-process inventory (S10) 10,500 Finished goods inventory (J21) 54,000 Job S10 is the only job in process on April 1.The following transactions were recorded for the month of April. a.Purchased materials on account, $90,000. b.Issued $91,000 of materials to production, $4,000 of which was for indirect materials.Cost of direct materials issued: Job S10 \ 23,000 Job C20 42,000 Job M54 22,000 c.Incurred and paid payroll cost of $20,460: Direct labor cost ($13/hour; total 920 hours) Job S10 \ 6,110 Job C20 4,030 Job M54 1,820 Indirect labor 2,500 Selling and administrative salaries 6,000 d.Recognized depreciation for the month: Manufacturing assets \ 2,200 Selling and administrative assets 1,700 e. Paid advertising expenses \ 6,000 f. Incurred factory utilities costs \ 1,300 g.Incurred other factory overhead costs $1,600 h.Applied factory overhead to production on the basis of direct labor-hours. i.Completed Job S10 during the month and transferred it to the finished goods warehouse. j.Sold Job J21 on account for $59,000. k.Received $25,000 of collections on account from customers during the month. Required: 1.Calculate the company's predetermined overhead rate. 2.Prepare journal entries for the April transactions.Letter your entries from a to k. 3.What was the balance of the Materials Inventory account on April 30? 4.What was the balance of the Work-in-Process Inventory account on April 30? 5.What was the amount of underapplied or overapplied overhead?

Operation costing is a hybrid costing system for products and services that uses:

If a firm is following the cost leadership strategy, and overhead accounts are complex, then the:

A hybrid costing system that uses job costing to assign direct materials costs, and process costing to assign conversion costs to products or services is:

Billy Baroo Company uses a job order cost system.The following information was found in the Work-in-Process account for the month of July. Billy Baroo applies overhead to production at a predetermined rate of 80% based on the direct labor cost.Job #23, the only job still in process at the end of July, has been charged with direct labor of $12,000.Direct material charged to Job #23 was:

The ideal criterion for choosing an allocation base for overhead is:

Catlett Company manufactures products to customer specifications.A job costing system is used to accumulate production costs.Factory overhead cost was applied at 120% of direct labor cost.Selected data concerning operations of the company are presented below. Direct Materials Inventory, Beginning \ 88,000 Direct Materials Inventory, Ending 75,000 Direct Materials Purchases 395,000 Direct Labor 300,000 Finished Goods Inventory, Beginning 137,000 Finished Goods Inventory, Ending 130,000 Actual Factory Overhead 322,000 Work-in-Process Inventory, Beginning 72,000 Work-in-Process Inventory, Ending 55,000 Required: Prepare a statement of cost of goods manufactured and a statement of cost of goods sold for the year ended December 31, 20XX.

Which of the following industries is often suitable for applying operation costing?

Job costing in service industries uses recording procedures and accounts similar to those illustrated in the chapter except for:

Standard costs are:

LM Company listed the following data for 2019: Budgeted factory overhead \ 1,143,800 Budgeted direct labor hours 86,000 Budgeted machine hours 28,595 Actual factory overhead 1,101,770 Actual direct labor hours 87,200 Actual machine hours 28,300 Required: (1) Assuming KLM applied overhead based on direct labor hours, calculate the company's predetermined overhead rate for 2019. (2) Assuming KLM applied overhead based on machine hours, calculate the company's predetermined overhead rate for 2019. (3) If overhead is applied based on direct labor hours, calculate the overapplied/underapplied overhead. (4) If overhead is applied based on machine hours, calculate the overapplied/underapplied overhead.

Powell Company uses a job costing system. During the month of May, Powell spent most of its time on job A50, which was started late in April. Following is cost information for job A50, other May costs, and relevant annual estimates. Required: (1) What is the overhead to be applied for May to job A50 upon completion on May 15? (2) What are total manufacturing costs for May for job A50? (3) Prepare the journal entry when job A50 is completed on May 15, assuming that the May 1 work-in-process inventory for job A50 was $600. (4) What is the profit on job A50 when it is sold on May 15? (5) Calculate the under- or over-applied overhead for May.

Departmental rates are appropriate when all the following exist except:

The following are types of rework except:

ABC Company uses a Materials Inventory account to record both direct and indirect materials. ABC charges direct materials to WIP, while indirect materials are charged to the Factory Overhead account. During the month of April, the company has the following cost information: Total materials (direct and indirect) purchased \ 90,000 Indirect materials issued to production 30,000 Total materials issued to production 110,000 Beginning materials inventory 50,000 The credit to the materials inventory account for materials used is:

Rockingham Manufacturing Company builds highly sophisticated engine parts for cars competing in stock racing and drag racing.The company uses a normal costing system that applies factory overhead on the basis of direct labor-hours.For the current year the company estimated that it would incur $256,000 in factory overhead costs and 16,000 direct labor-hours.The April 1 balance in inventory accounts follow: Material Inventory \ 54,000 Work-in-Process Inventory (Y12) \ 21,000 Finished Goods Inventory (Z11) \ 108,000 Job Y12 is the only job in process on April 1.The following transactions were recorded for the month of April: a.Purchased materials on account, $160,000 b.Issued $180,000 of materials to production, $6,000 of which was for indirect materials.Cost of direct materials issued: Job Y12 \ 46,000 Job D20 84,000 Job E33 44,000 c.Incurred and paid payroll cost of $40,920 Direct labor cost ($20/hour; total 1,196 hours) Job Y12 \ 12,220 Job D20 8,060 Job E33 3,640 Indirect labor 5,000 Selling and administrative salaries 12,000 d.Recognize deprecation for the month: Manufacturing assets \ 4,000 Selling and administrative assets 3,000 e. Paid advertising expenses \ 15,000 f. Incurred factory utility costs 3,600 g. Incurred other factory overhead costs 3,200 h.Applied factory overhead to production on the basis of direct labor-hours i.Completed Job Y12 during the month and transferred it to the finished goods warehouse j.Sold Job Z11 on account for $120,000 k.Received $50,000 of collections on account from customers during the month Required (1) Calculate the company's predetermined overhead rate. (2) Prepare journal entries for the April transactions.Record job-specific items in individual Work-in-Process accounts. (3) What was the balance of the Materials Inventory account on April 30? (4) What was the balance of the Work-in-Process Inventory control account on April 30? (5) What was the amount of underapplied or overapplied overhead?

Randall Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. Factory overhead cost was applied at 125% of direct labor cost. Selected data concerning the past year's operation of the company are presented below. January 1 December 31 Direct materials \ 77,000 \ 40,000 Work in process 66,000 42,000 Finished goods 115,000 100,000 Other information Direct materials purchases \ 324,000 Cost of goods available for sale 950,000 Actual factory overhead costs 260,000 The cost of goods manufactured during the year is:

Riverside Company manufactures two sizes of T-shirts, medium and large.Both sizes go through cutting, assembling and finishing departments.The company uses operation costing. Riverside Company's conversion costs applied to products for the month of June were: Cutting Department $60,000, Assembling Department $60,000, and Finishing Department $30,000.June had no beginning or ending work-in-process inventory. The quantities and direct materials costs for June follow: Job No. Size Quantity Direct Materials 601 Medium 10,000 \ 50,000 602 Large 20,000 110,000 Each T-shirt, regardless of size, required the same cutting, assembling and finishing operations. Required: (1) Compute both unit cost and total cost for each shirt size produced in June. (2) Prepare journal entries to record direct materials and conversion costs incurred in the three departments, and the finished goods costs for both shirt sizes.