Exam 4: Job Costing

When using the proration approach the final balance in the Manufacturing Overhead Control account can be closed to which account(s)at year-end?

Describe job-costing and process-costing systems.Explain when it would be appropriate to use each.

Answer the following question(s)using the information below.A law office employs full-time attorneys and five paraprofessionals.For the current year indirect costs were budgeted at $225,000, but actually amounted to $350,000.Direct and indirect costs are applied on a professional labour-hour basis which includes both attorney and paraprofessional hours.Total budgeted labour-hours were 25,000; however, actual labour-hours were 30,000. -What is the overhead applied to a 500 hour job if the law office uses actual costing?

A cost allocation base is only financial in nature, and is usually the cost driver of the particular costs being measured.

Direct costs are allocated to the cost object using a cost-allocation method.

Use the information below to answer the following question(s).A dental office is in the process of changing their costing system.Their system currently uses a single direct cost pool (professional labour)and a single indirect cost pool (staff support).The direct categories in the new, refined costing system include: 1.Professional partner labour.Average total annual compensation of the two partners is $100,000; and, each partner has 2,000 hours of budgeted billable time.2.Dental assistant labour.Average total annual compensation of the four assistants is $22,500 each, and each assistant has 2,000 hours of budgeted billable time.3.Office staff.Average total annual compensation of the two staff members is $15,000 each, and each has 2,000 hours of budgeted billable time.The indirect category in the new refined costing system includes professional liability insurance.The budgeted indirect amount is $200,000, and the allocation base is budgeted professional labour hours.The dentist and dental assistants are considered professional labour hours. -What is the budgeted indirect cost allocation rate per unit of the allocation base for the professional liability insurance?

Use the information below to answer the following question(s).Jim's Computer Products manufactures keyboards for computers.In June, the two production departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000 direct manufacturing labour hours in Department 2.The budgeted manufacturing overheads for the month were $34,500 and $37,500, respectively.For Job 501, the actual costs incurred in the two departments were as follows: Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labour hours in Department 2.The company uses a budgeted departmental overhead rate for applying overhead to production. -What is the total cost assigned to Job 501 based on normal costing?

Why does the Manufacturing Overhead Control account (debit)need to equal the Manufacturing Control account (credit)? What will be the effect of having an end of year remaining balance, debit or credit, on the evaluation of profitability?

At the end of the year, the direct costs traced to jobs using the budgeted rates will equal actual direct costs.

For each item below indicate the source documents that would most likely authorize the journal entry in a job-costing system. A)labour time card B)job-cost record C)materials requisition record D)purchase invoice E)sales invoice F)labour time card -indirect manufacturing labour

A materials requisition record and a labour time record are examples of which of the following?

The Dougherty Furniture Company manufactures tables.In March, the two production departments had budgeted allocation bases of 4,000 machine hours in Department 100 and 8,000 direct manufacturing labour hours in Department 200.The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively.For Job A, the actual costs incurred in the two departments were as follows: Job A incurred 800 machine hours in Department 100 and 300 manufacturing labour hours in Department 200.The company uses a budgeted indirect cost allocation rate for applying overhead to production.Required: a.Determine the budgeted manufacturing indirect cost allocation rate for each department. b.Prepare the necessary journal entries to summarize the March transactions for Department 100. c.What is the total cost of Job A?

Use the information below to answer the following question(s).The following data were taken from the records of Big Sky Ltd., a manufacturing company.The company has been calculating the actual indirect cost allocation rate using direct labour hours as the allocation base. -Normandeau Company's actual indirect cost pool amounted to $1,400,000 and the direct labour pool was $5,400,000.Overhead is allocated on the basis of direct labour hours.Actual and budgeted direct labour hours were 25,000 and 30,000 for the period.What is the manufacturing overhead cost allocation rate using actual direct labour hours as the cost allocation base?

Northern Manufacturing uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs.At the beginning of the year, the company expected to incur the following: At the end of the year, the company had actually incurred the following: Required: 1.Compute Northerns's indirect cost allocation rate based on labour cost.2.Compute Northerns's indirect cost allocation rate based on machine hours.3.How much overhead was allocated during the year if the allocation base was machine hours? 4.How much manufacturing overhead was incurred during the year?

Use the information below to answer the following question(s).A Hospital uses a job cost system for all surgery patients.In February, the pre-operating room (PRE-OP)and operating room (OR)had budgeted allocation bases of 1,000 nursing hours and 500 nursing hours, respectively, and budgeted nursing overhead charges were $28,000 and $22,000, respectively.The hospital ward rooms for surgery patients had budgeted overhead costs of $200,000 and 2,500 nursing hours for the month.PRE-OP, OR and the hospital ward have separate indirect cost pools.The hospital uses a budgeted overhead rate for applying overhead to patient stays.For patient Jones, actual hours incurred were six and eight hours, respectively, in the PRE-OP and OR rooms.He was in the hospital for 5 days (120 hours).Other costs related to Jones were: -What was the total PRE-OP cost for patient Jones?

LeBlanc Company has the following balances as of the year ended December 31, 2018. Additional information is as follows: Required: a.Compute beginning direct materials inventory. b.Compute beginning WIP inventory. c.Compute beginning finished goods inventory. d.Compute actual factory overhead incurred.

Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products.Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department.The following estimates were provided at the beginning of the current year: The accounting records of the company show the following data for Job #846: Required: a.Compute the manufacturing indirect cost allocation rate for each department. b.Compute the total cost of Job #846. c.Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.

The objective of allocating indirect costs is to measure the underlying usage of indirect resources by jobs.

For each cost pool, the indirect cost rate equals the indirect cost pool divided by the cost allocation base.

For normal costing, even though the budgeted indirect-cost rate is based on estimates, indirect costs are allocated to products based on actual levels of the cost-allocation base.