Exam 4: Job Costing

The main advantage of using budgeted cost rates rather than actual cost rates is

Last week Job # WPP 298 was charged: DM of $4,606; DL of $1,579; and, MOH of $3,960 based on machine hours.The materials requisition record for this week showed an additional purchase of 10 brackets at a unit cost of $16; the direct labour costs were the same as the first week; and, the total machine hours for both weeks are now 140 hours at $45 per machine hour.Calculate the revised total job cost.(direct materials + direct labour + manufacturing overhead).

Valley 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 #922: Required: a.Compute the manufacturing indirect cost allocation rate for each department. b.Compute the total cost of Job #922.

Klink Corporation applies overhead based upon machine-hours.Budgeted factory overhead was $295,400 and budgeted machine-hours were 21,100.Actual factory overhead was $319,800 and actual machine-hours were 18,090.Before disposition of under/overallocated overhead, the following information was available: Required: a.Determine the budgeted factory overhead rate per machine-hour. b.Compute the over/underallocated overhead. c.Prepare the journal entry to dispose of the variance using the write-off to cost of goods sold approach.The corporation uses Manufacturing Overhead Allocated and Manufacturing Overhead control accounts. d.Prepare the journal entry to dispose of the variance using the proration approach. e.Identify three value chain categories and provide an example for each on how Klink Corporation could reduce its indirect costs.

Answer the following question(s)using the information below.Cloudy Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect cost allocation rate of $21 per direct labour hour.The following data are obtained from the accounting records for June in the current year: -For June, manufacturing overhead was

A job costing system assigns costs to a distinct unit or set of units of a product or service.

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 jobs if the law office uses normal costing?

The new manager of the insurance division does not understand how the company can have so many overhead rates for assigning costs to the activities of the company's life insurance underwriters.There is one rate schedule for average assignable costs when agents write standard policies.There is another rate schedule which the agents must complete when they write special policies, and these policies are costed out differently from those that are categorized as standard policies.Required: Why might the company have different costing systems with different overhead rates for the standard and specialized policies?

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 budgeted indirect cost allocation rate for Department 2?

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 OR cost for patient Jones?

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 direct cost rate for dental assistant labour?

In general terms the process of assigning costs to a particular product or service is called

Which of the following is NOT possible to use as a cost allocation base for manufacturing overhead?

Copley Enterprises manufactures digital video equipment.For each unit $1,475 of direct material is used and there is $1,500 of direct manufacturing labour at $30 per hour.Manufacturing overhead is applied at $35 per direct manufacturing labour hour.Calculate the cost of each unit.

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. -What is the actual indirect cost rate at Big Sky Ltd.using machine hours as the allocation base?

The Manufacturing Overhead Control account is debited for

Use the information below to answer the following question(s).Because the Beckworth Company used a budgeted indirect cost allocation rate for its manufacturing operations, the amount allocated ($190,000)was different from the actual amount incurred ($175,000).These were the respective ending balances in the Manufacturing Overhead Allocated and Manufacturing Overhead control accounts.Before disposition of under/overallocated overhead, the following information was available: -What is the journal entry Beckworth Company should use to write-off the difference between allocated and actual overhead using the proration approach based on overhead allocated?

Which of the following statements about normal costing is TRUE?

In a costing system

Managers and accountants gather the information that goes into their cost systems through source documents, which are the original records that support journal entries in an accounting system.