Exam 17: Job Order and Process Costing

Process costing is used by companies that produce large numbers of identical units in a continuous fashion.

Carlton Manufacturing Company purchased $65,000 of raw materials on account. The materials will be used to produce furniture. Which of the following journal entries correctly records this transaction?

On January 1, 2012, Jackson Company's work in process inventory account had a balance of $65,000. During 2012, materials requisitioned for use in production amounted to $70,000, of which $66,000 represented direct materials. Factory wages for the period were $209,000, of which $186,400 were for direct labor. Manufacturing overhead is allocated on the basis of 60% of direct labor cost. Actual overhead was $116,440. Jobs costing $353,240 were completed during 2012. The December 31, 2012, balance in work in process inventory is:

On June 30, Coraline Company finished job number 750, with total job costs of $4,600, and transferred the costs to Finished goods. On July 6, they completed the sale of the goods to a customer for $5,100 cash. In order to record the sale, two entries are necessary-one to record revenue, and one to record cost of goods sold. Please provide the first of two entries to record sales revenue.

In job order costing, the journal entry to issue indirect materials to production should include which of the following?

During 2012, a company incurs $500,000 of manufacturing overhead costs and allocates out $492,000 of manufacturing overhead costs. Overhead costs have been underallocated.

Jorst Manufacturing Company began business on January 1, 2012. During its first year of operation, Jorst worked on 5 industrial jobs, and reported the following information at year-end: Job 1 Job 2 Job 3 Job 4 Job 5 Direct Materials 1,000 7,500 4,000 3,500 1,500 Direct Labor 12,000 20,000 13,000 12,000 800 Allocated Mfg. Overhead 1,500 6,000 2,500 7,500 200 Job completed: Jun 30 Sep 1 Oct 15 Nov 1 Not completed Job sold: Jul 10 Sep 12 Not sold Not sold N/A Revenues: 25,000 39,000 N/A N/A N/A - At year-end, what was the balance in Work in process?

Which of the following is an industry that would use a process costing system rather than a job order costing system?

Broxsie Fabrication Company issued $40,000 of direct materials to production and $5,500 of indirect materials to production. Which of the following transactions would correctly record the transaction?

Abba Accounting expects its accountants to work a total of 24,000 direct labor hours per year. Abba's estimated total indirect costs are $240,000. The direct labor rate is $75 per hour. If Abba does a job requiring 40 hours of direct labor, what is the total job cost?

In 2012, the Doric Agricultural Products Company used a predetermined manufacturing overhead rate of 150% times direct labor cost. Information for the year is as follows: Actual direct materials cost \ 812,500 Actual direct labor cost \ 180,000 Actual overhead costs incurred: \ 264,000 Total direct labor hours 5,520 What was the preliminary ending balance in the manufacturing overhead account, before the year-end adjustment to clear the balance to zero?

The Quadrangle Fabrication Plant had a fire at the beginning of 2013 and most of the records for the year 2012 were lost. Some data for the year 2012 were located by the accountants and are shown below. Total manufacturing overhead estimated at the beginning of the year: \ 105,840 Total direct labor costs estimated at the beginning of the year: \ 186,000 Total direct labor hours estimated at the beginning of the year: 3,600 direct labor hours Actual manufacturing overhead costs for the year: \ 99,760 Actual direct labor costs for the year: \ 142,000 Actual direct labor hours for the year: 2,950 direct labor hours - The company bases its manufacturing overhead allocation on direct labor hours. How much manufacturing overhead was allocated to production in 2012? (Please round to the nearest whole dollar.)

Caltran Company has just completed manufacturing job number 445. It included $320 of direct materials cost, $1,240 of direct labor cost, and $560 of allocated overhead. Please provide the journal entry needed at the time the job is completed.

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the Refining Department had 2,000 liters of partially processed product in production. During January, 32,000 liters were transferred in from the Mixing Department and 29,000 liters were completed and transferred out. At the end of the month, there were 5,000 liters of partially processed product remaining in the Refining Department. See additional details below. Refining Department, beginning balance at January 1, 2012 Quantity: 2,000 units (partially processed) Cost: \ 15,600 of costs transferred in \ 1,900 of materials cost \ 4,500 of conversion cost \ 22,000 total account balance Costs added during January Cost of units transferred in: \ 222,400 Direct materials cost \ 45,000 Conversion cost \ 93,750 $\text { Refining Department, ending balance at January } 31,2012$ Quantity: 5,000 units (partially processed) \% completion for materials cost: 90\% \% completion for conversion cost: 75\% - Please perform a process costing analysis and answer the following question: For the Refining Department in the month of January, what was cost per equivalent unit with respect to conversion costs? (Please round to nearest cent.)

Altina Company just finished job A40. It included $400 of direct materials, and $3,600 of direct labor. Altina uses a predetermined manufacturing overhead rate based on a percentage of direct labor costs. That rate is 40%. Please provide the journal entry needed to record the completion of the job.

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the Refining Department had 2,000 liters of partially processed product in production. During January, 32,000 liters were transferred in from the Mixing Department and 29,000 liters were completed and transferred out. At the end of the month, there were 5,000 liters of partially processed product remaining in the Refining Department. See additional details below. Refining Department, beginning balance at January 1, 2012 Quantity: 2,000 units (partially processed) Cost: \ 15,600 of costs transferred in \ 1,900 of materials cost \ 4,500 of conversion cost \ 22,000 total account balance Costs added during January Cost of units transferred in: \ 222,400 Direct materials cost \ 45,000 Conversion cost \ 93,750 $\text { Refining Department, ending balance at January } 31,2012$ Quantity: 5,000 units (partially processed) \% completion for materials cost: 90\% \% completion for conversion cost: 75\% - Please perform a process costing analysis and answer the following question: For the Refining Department in the month of January, what was the total number of equivalent units with respect to conversion costs?

Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012, Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of 7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800. In June, Fogelin signed a contract for a Russian ballet performance. They negotiated a price of $6,400 for their services. When the job was complete, Fogelin's records showed that they had logged 36.5 billable hours. - What was the actual total cost of the job for Fogelin?

Arabica Manufacturing Company uses a predetermined manufacturing overhead rate based on a percentage of direct labor cost. At the beginning of 2012, they estimated total manufacturing overhead costs at $1,050,000, and they estimated total direct labor costs at $840,000. In June, 2012, Arabica completed job number 511. Job stats are as follows: Direct materials cost \ 27,500 Direct labor cost \ 13,000 Direct labor hours 400 hours Units of product produced: 200 crates - How much manufacturing overhead was allocated to the job?

Cost of goods sold needs to be debited at year-end when the manufacturing overhead is overallocated in order to clear the overhead account to zero.

On June 1, 2012, Dalton Production Company had beginning balances as shown in the T-accounts below. During June, the following transactions took place: June 2: Issue $2,400 of direct materials and $200 of indirect materials to production. - Following this transaction, what was the balance in the Work in process inventory account?