Exam 5: Job Order Costing

When raw materials are placed into production,the ___________ account is debited

Prepare the necessary journal entries from the following information for Parrish Company,which uses a perpetual inventory system. a. Purchased raw material on account $\$ 61,200 .$ b.Requisitioned raw material for prochuction as follows: direct material-75 percent of purchases; indirect material-20 percent of purchases. c. Direct labor wages of $\$ 35,500$ are accrued as are indirect labor wages of $\$ 14,100$ . d.Overhead incurred and paid for is $\$ 68,100$ . e.Overhead is applied to production based on 125 percent of direct labor cost. f. Goods costing $\$ 99,500$ were completed during the period. g. Goods costing $\$ 53,400$ were sold on account for $\$ 81,200$ .

A company that manufactures custom bridal gowns will use a process costing system to track costs.

Overhead is applied to jobs in a job-order costing system

Spears Manufacturing Company Spears Manufacturing Company produces beach chairs.Chair frames are all the same size,but can be made from plastic,wood,or aluminum.Regardless of frame choice,the same sailcloth is used for the seat on all chairs.Spears has set a standard for sailcloth of $9.90 per square yard and each chair requires 1 square yard of material.Spears produced 500 plastic chairs,100 wooden chairs,and 250 aluminum chairs during June.The total cost for 1,000 square yards of sailcloth during the month was $10,000.At the end of the month,50 square yards of sailcloth remained in inventory. Refer to Spears Manufacturing Company.Assuming that there was no sailcloth in inventory at the beginning of June,the unfavorable material quantity variance for the month was

Dillman Company manufactures custom-built conveyor systems for factory and commercial operations.The cost accountant for Dillman Company is in the process of educating a new employee,Jerry Cole about the job-order costing system that Dillman Company uses.(The system is based on normal costs;overhead is applied based on direct labor cost and rounded to the next whole dollar. )The following job-order cost records are available for July:

Job No.	Direct Materials	Direct Labor	Applied OH	Total Cost
667	$ 5,901	$1,730	$ 1,990	$ 9,621
669	18,312	1,810	2,082	22,204
670	406	500	575	1,481
671	51,405	9,500	10,925	71,830
672	9,615	550	633	10,798

To explain the missing job number,the cost accountant informed Jerry that Job #668 had been completed in June.The accountant also told Jerry that Job #667 was the only job in process at the beginning of July.At that time,the job had been assigned $4,300 for direct material and $900 for direct labor.At the end of July,Job #671 had not been completed;all other jobs were complete.The cost accountant asked Jerry several questions to determine whether he understood the job-order costing system. Required:Help Jerry answer the following questions: a. $\text { What is the predetermined overhead rate used by Dilman Company? }$ b. $\text { What was the total cost of beginning Work in Processinventory ? }$ c. $\text { What was total prime cost incurred for the month of July? }$ d. $\text { What was cost of goods manufactured for July? }$

A company that manufactures large quantities of homogenous goods will use a job-order costing system.

At the end of the last fiscal year,Drury Company had the following account balances: Overupplied ovehead $\$ 9,000$ Cost ar Goods Sald $\$ 860,000$ Work in Procese Inventory $\$ 36,000$ FinishedGoods Inventory $\$ 74,000$ If the most common treatment of assigning overapplied overhead were used,the final balance in Cost of Goods Sold is:

The ____ provides management with a historical summation of total costs for a given product.

Treasures Company manufactures picture frames of all sizes and shapes and uses a job-order costing system.There is always some spoilage in each production run.The following costs relate to the current run: Estimated overhead (exclusive of spoilage)                  $\$ 160,000$ Spoilage(estimeted)                                                        $\$ 25,000$ Sules value of spoiled frames                                        $11,500 $\text { Labor hours }$                                                             100,000 The actual cost of a spoiled picture frame is $7.00.During the year 170 frames are considered spoiled.Each spoiled frame can be sold for $4.The spoilage is considered a part of all jobs. Required: a. Labor hours are used to determine the predetermine doverheadrate. Whatis the predetermined overhe ad rate per direct labor hour. b. Prepare the jounal entry needed to record the spoilage. c. Prepare the iounnal entry if the spoilage relates only to Job#12 rather than being a part of all production runs.

You are asked to bring the following incomplete accounts of Parrish Printing Corporation up to date through January 31 of the current year.Consider the data that appear in the T-accounts as well as additional information given in items (a)through (i). Parrish's job-order costing system has two direct cost categories (direct material and direct manufacturing labor)and one indirect cost pool (manufacturing overhead,which is allocated using direct manufacturing labor costs).

Materials Inventory Control		Wages Payable Control
12/31		Balance 15,000
Balance 15,000		Balance 3,000

		Manufacturing Department
		Overhead Control
Work in Process Inventory Control	January
	Charges 57,000

		Manufacturing Overhead Control

Finished Goods Inventory Control		Cost of Goods Sold
12/31
Balance 20,000

Additional Information: a. Mranufactuing department overhead is allocated using a budgeted rate set every December. Management forec asts next year's overhead and next year's direct manufacturing labor costs. The budget for the current year is $\$ 400,000$ of direct manufacturinglabor and $\$ 600,000$ manufacturing overheach. b. The only job unfinished on January 31 is No. 419, on which direct manufacturinglabor costs are $\$ 2,000$ (125 direct marnufacturing labor hours) and direct material costs are $\$ 8,000$ . c. Total material place into prochuction churing January is $\$ 90,000$ . d. Cost of goods completed during January is $\$ 180,000$ . e. Material inventory as of J anuary 31 is $\$ 20,000$ . f. Finished goods inventory as of Januay 31 is $\$ 15,000$ . g. All plant workers earn the same wage rate. Direct manufacturing labor hours for J anuary total 2,500. Other labor and supeavision totals $\$ 10,000$ . h. The gross plant payroll for January pay periods totals $\$ 52,000$ . Ignore with holdings. All personnel are paid on aweekly basis. i. All" actual" manufacturing department overhead incurred chring January has alre ady been posted. Required: a. Material purchased during January b. Cost of Goods Sold during J anuary c. Direct Manufactuing Labor Costs incurred during J anuary d. Manufacturing Overhead Allocated duxing Januaty e. Balance, Wages Payable Contro1, December 31, prior year f. Balance, Work in Process Inventory Control, Jamuary 31, curent year g. Balance, Work in Process Inventory Control, December 31, prior year h. Balance, Finished Goods Invent ory Control, Jamuay 31, current year i.Manufacturing Overhead underapplied or overapplied for January

Romano Company The following information pertains to Romano Company for September:

	Direct Material	Direct Labor	Overhead
Job #323	$3,200	$4,500	?
Job #325	?	5,000	?
Job #401	5,670	?	$5,550

Romano Company applies overhead for Job #323 at 140 percent of direct labor cost and at 150 percent of direct labor cost for Jobs #325 and #401.The total cost of Jobs #323 and #325 is identical. Refer to Romano Company.What amount of overhead is applied to Job #325?

If abnormal spoilage occurs in a job-order costing system,has a material dollar value,and is related to a specific job,the recovery value of the spoiled goods should be $\text {\underline{ debited to} }$                   $\text {\underline{ credited to} }$

Overapplied overhead would result if

A company producing which of the following would be most likely to use a price standard for material?

When indirect labor is recorded for a job in process,_______ is debited.

If a normal loss is anticipated on all jobs,the overhead application rate should include an amount for the cost of defective units less disposal value.

Peoria Company Peoria Company has two departments (Processing and Packaging)and uses a job-order costing system.Peoria applies overhead in Processing based on machine hours and on direct labor cost in Packaging.The following information is available for August: Machine hours Directlabor cost \ 47,600 \ 24,000 Applied overhead \ 60,500 \ 54,750 Refer to Peoria Company What is the overhead application rate for Packaging?

Sanchez Products has no Work in Process or Finished Goods inventories at the close of business on December 31 of the current year.The balances of Sanchez Products' accounts as of December 31 are as follows: Cost of goods sold-unadjusted \ 2,040,000 Selling \& administrative expenses 900,000 Sales 3,600,000 Manufacturing overhead control 700,000 Manufacturing overhead applied 648,000 Pretax income for the current year is:

A company that manufactures large quantities of homogenous goods will use a process costing system.