Exam 6: Job-Costing Systems

The FSR Company uses a budgeted factory overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year 2006 are given below: During 2006 the Paine Company used 60,000 direct labour hours. At the end of 2006, the company's records revealed the following information: a. Calculate the budgeted overhead rate for 2006. b. Determine the amount of underapplied or overapplied overhead for 2006. c. If underapplied or overapplied overhead is treated as an adjustment to cost of goods sold, determine the cost of goods sold that would appear on the company's income statement.

The centrepiece of a job-costing system is the

As managers seek more accurate product costing, overhead application solely on the basis of direct-labour hours or direct-labour cost is certain to

A normal costing system uses the following:

Witty, Inc. uses a job-order cost system and had the following data available for 20X1. -The journal entry to record the application of the factory overhead would include a

The excess of actual overhead over the overhead applied to products is called

The most widely used approach in disposing of an overhead variance is proration.

Reed Company incurred actual overhead costs of $640,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $630,000, and budgeted direct-labour cost was $300,000. Actual direct-labour cost was $320,000 for the year. The factory overhead variance for the year was

Fulton Company incurred actual overhead costs of $160,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $157,500, and budgeted direct-labour cost was $75,000. Actual direct-labour cost was $80,000 for the year. The disposition of the variance, assuming a material amount, would include a

Dentlinger Company uses a job-order cost system and had the following data available for 20X2. -The journal entry to record the application of the factory overhead would include a

The most widely used approach to disposing of overhead variances is

Fulton Company incurred actual overhead costs of $160,000 for the year. A budgeted factory-overhead rate of 210 percent of direct-labour cost was determined at the beginning of the year. Budgeted factory overhead was $157,500, and budgeted direct-labour cost was $75,000. Actual direct-labour cost was $80,000 for the year. The disposition of the variance, assuming an immaterial amount, would include a

A system that accumulates manufacturing costs by jobs.

A job-order cost system associates costs with particular jobs.

Cowbell Incorporated uses a job-order costing system and a budgeted factory overhead rate based on machine hours. At the beginning of the year, Cowbell estimated manufacturing overhead for the year at $50,000. Machine hours were estimated at 8,000. The following information pertains to December of the current year: Actual manufacturing overhead costs incurred in December were $5,000 of which $1,000 was depreciation on the factory building and $500 was depreciation on the production equipment. a. Compute the budgeted factory overhead application rate. b. Prepare the journal entries to record the activity for the month of December. c. Determine the cost associated with each job. d. If Job No. 77 was completed during December, what is the balance of Work in Process as at December 31? e. If there was no balance in the Overhead Control account on December 1, what is the balance as at December 31? f. Prepare the journal entry to close underapplied or overapplied overhead to cost of goods sold.

Sanford Company applies overhead based upon machine hours. Budgeted factory overhead was $532,800 and budgeted machine hours were 37,000. Actual factory overhead was $575,840 and actual machine hours were 38,100. Before disposition of under/overapplied overhead, the cost of goods sold was $1,120,000 and ending inventories were as follows: Required: a. Determine the budgeted factory-overhead rate per machine hour. b. Compute the over/underapplied overhead. c. Assuming the variance is immaterial, give the journal entry to dispose of the variance. d. Assuming the variance is material, give the journal entry to dispose of the variance using proration.

Product costs appear as cost of goods sold in income statements and as finished-goods inventory values in balance sheets.

Witty, Inc. uses a job-order cost system and had the following data available for 20X1. -The journal entry to record the cost of goods completed would include a

The following information was gathered for Larsen Company for the year ended December 31, 20X1. -Assume that direct-labour hours is the cost driver.What is the amount of over/underapplied overhead?

Harnack Company had the following information: Budgeted cost driver activity levels: Actual cost driver activity levels: -The budgeted factory-overhead rate using production setups as the cost driver is