Exam 4: Job Costing

Frankenreid Corporation uses a job costing system.Record the following transactions in Frankenreid Corporation's general journal for the current month: a.Purchased raw materials on account, $15,000. b.Requisitioned $19,700 of direct materials and $8,800 of indirect materials for use in production. c.Factory payroll incurred, $142,000; 90% direct labour, 10% indirect labour. d.Recorded depreciation expense factory equipment $19,000, and other manufacturing overhead of $28,600 (credit accounts payable). e.Allocated manufacturing overhead costs based on 120% of direct labour cost. f.Cost of completed production for the current month, $205,000. g.Cost of finished goods sold, $190,000; selling price, $225,000 (all sales on account).

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 would be the percentage change in the budgeted direct cost rate if they consider hiring one more employee, as part of the office staff?

A manufacturing company has actual overhead of $570,000, budgeted overhead of $620,000, and budgeted 18,000 direct labour hours.Management believes that direct labour hours are the best allocation base to use for allocation of overhead.Actual direct labour hours were 20,000 hours.Assuming that the company used normal costing methods for allocation, and has the following account balances in its general ledger, what are the adjustments for each account using the proration method based on the amount of manufacturing overhead included in each account balance before proration?

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 is the budgeted overhead rate for the hospital floor for surgery?

The cost driver of an indirect cost is often used as the cost allocation base.

General Hospital uses a job-costing system for all patients.In March the Critical Care and Special Care facilities had cost allocation bases of 4,000 nursing days and 3,000 nursing days, respectively.The nursing care charges for each department for the month were $2,106,000 and $1,500,000, respectively.The General Care area had costs of $2,700,000 and 7,500 nursing days for the month.Patient Jim Hansen spent 5 days in Critical Care, 4 days in Special Care and 21 days in General Care during March.Required: a.Determine the cost allocation rate for each department. b.What are the total charges to Mr.Hansen if he was in the facility the entire month of March?

The general ledger account that combines the separate job cost records is called the ________ account.

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 1?

Larry's Appliance Shop operates retail stores that sell appliances.The cost objects are the individual sales of a given type of appliance and sales support.For refrigerators in July, the following costs were recorded: Required: a.Which of the costs will be subject to direct cost tracing? b.What is the total cost for refrigerators? c.What is the total cost of the Sales Support for refrigerators?

Which of the following would be appropriately costed using a process costing system?

The actual costs of all individual overhead categories are recorded in the manufacturing overhead control account as credit entries.

Fixed and variable costs may be allocated to a cost object.

Answer the following question(s)using the information below.Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect cost allocation rate of $15 per direct labour hour.The following data are obtained from the accounting records for June in the current year: -The actual amount of manufacturing overhead costs incurred in June totals

Answer the following question(s)using the information below.Sunny Company manufactures pipes and applies manufacturing overhead costs to production at a budgeted indirect cost allocation rate of $15 per direct labour hour.The following data are obtained from the accounting records for June in the current year: -The amount of manufacturing overhead allocated to all jobs during June totals

In a job cost system, the cost object is a unit or multiple units of a distinct product or service called a job.

In the five-step decision-making process which of the following is an element of the last step in the process?

Explain how a budgeted indirect cost allocation rate is determined.

Sambell 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 Sambell's indirect cost allocation rate based on labour cost.2.Compute Sambell's indirect cost allocation rate based on machine hours.3.How much overhead was allocated during the year if the allocation base was direct labour cost? 4.How much manufacturing overhead was incurred during the year?

A local attorney employs ten full-time professionals.The budgeted compensation per employee is $75,000.The maximum billable hours for each client are 200.Clients always receive their full amount of time.All professional labour costs are included in a single direct cost category and are traced to jobs on a per-hour basis.Any other costs are included in a single indirect cost pool, allocated according to professional labour-hours.Budgeted indirect costs for the year are $1,000,000 and the firm had 20 clients.Required: a.What is the direct labour budgeted cost rate per hour? b.What is the indirect cost pool budgeted cost rate per hour?

Use the information below to answer the following question(s).Capable Carts manufactures custom carts for a variety of uses.The following data have been recorded for Job 892, which was recently completed.Direct materials used cost $6,300, the budgeted direct materials were $5,900.There were 180 direct labour hours worked on this job at a direct labour wage rate of $20 per hour; the budgeted direct labour wage rate was $21 per hour.There were 75 machine hours used on this job.The budgeted and actual indirect cost allocation rates are $32 and $29 per machine hour used, respectively. -What is the total manufacturing cost of Job 892 using normal costing?