Exam 17: Job Order and Process Costing

In a manufacturing operation, taxes and insurance for the plant should be debited to Manufacturing overhead.

When calculating the predetermined manufacturing overhead rate, what is the correct basis of calculation?

Accounting firms, building contractors, and healthcare providers are companies that use job order costing.

When direct materials are requisitioned, the Work in process account will be debited.

The cost of goods manufactured is recorded as a debit to the Work in process account.

Direct materials and direct labor are assigned to individual job cost records, and recorded with a debit to Work in process.

When materials are requisitioned for a job, the materials inventory account is debited.

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. Which of the following is the correct entry needed to record the cost of goods sold?

When job order costing is used in the service industry, the allocation of indirect costs is normally based on direct labor hours.

In a process costing system, direct materials costs are normally assumed to be incurred evenly throughout the production process.

A job order costing system is useful in which of the following circumstances?

A process costing system is useful in which of the following circumstances?

LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. On January 1, 2012, the first department, Mixing, had a zero beginning balance. During January, 40,000 liters of chemicals were started into production. During the month, 32,000 liters were completed, and 8,000 remained in process, partially completed. In the Mixing Department, all raw materials are added at the beginning of the production process, and conversion costs are applied evenly through the process. At the end of January, the equivalent unit data for the Mixing Department were as follows: EQUIVALENT UNITS Equivalent Units Units to account for Transferred In Direct Mt1s Cost Conversion Cost Completed 32,000 0 32,000 32,000 End bal WIP 8,000 0 8,000 4,800 40,000 0 40,000 36,800 - In addition to the above, the costs per equivalent unit were $1.20 for direct materials and $5.75 for conversion costs. Using this data, please calculate the full cost of the units that were transferred out of the Mixing Department and into the Refining Department.

Petraeus Fabrication Company has provided the following information for the year 2012: Actual manufacturing overhead costs incurred \ 268,000 Manufacturing overhead costs allocated to production \ 259,200 Actual direct materials cost \ 800,000 Actual direct labor cost \ 144,000 Actual direct labor hours 3,200 direct labor hours Actual machine hours 10,900 machine hours Based on the above information, what was Petraeus's allocation rate? (Hint: for this type of problem, the "trial and error" method may be used.)

Overallocation of manufacturing overhead would require which of the following year-end adjustments?

Indirect materials issued and indirect labor costs incurred are debited to the Manufacturing overhead account.

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. June 13: Pay $7,500 of direct factory labor cost, and $14,100 of indirect factory labor cost. - Following these transactions, what was the balance in the Manufacturing overhead account?

Darrius Travel Services provided the following information: Cost allocation rate for direct labor: $40 per hour Cost allocation rate for indirect costs: $22 per hour If Darrius receives $350 for a job requiring 5 hours of direct labor, they will make a profit of $40.

Rankin Food Products produces cane sugar syrup in bulk quantities, and uses process costing. There are three processing departments-Mixing, Refining, and Packaging. Using process costing analysis, Rankin determined that the cost of the units completed and transferred out of the Mixing Department during the month was $11,000. Which of the following is the correct journal entry to record the cost of the units completed and transferred out to the next department?

When manufacturing overhead is allocated, the amount is recorded as a debit to Finished goods and a credit to Work in process.