Question 1

A ________ accounting system records production activities using a perpetual inventory system.

Accepted Answer

The answer of A ________ accounting system records production activities...

Question 2

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

Accepted Answer

A)  50% of direct labor cost. 
B)  80% of direct labor cost. 
C)  300% of direct labor cost. 
D)  40% of direct labor cost. 
E)  200% of direct labor cost. 
A)  50% of direct labor cost. 
B)  80% of direct labor cost. 
C)  300% of direct labor cost. 
D)  40% of direct labor cost. 
E)  200% of direct labor cost.

Question 3

Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount of applied overhead.

Accepted Answer

A)  $88,000. 
B)  $79,200. 
C)  $167,200. 
D)  $35,376. 
E)  $34,320. 
A)  $88,000. 
B)  $79,200. 
C)  $167,200. 
D)  $35,376. 
E)  $34,320.

Question 4

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. 
-Minstrel's beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively. Compute the cost of product transferred to Finished Goods Inventory:

Accepted Answer

A)  $413,000. 
B)  $428,500. 
C)  $558,500. 
D)  $415,000. 
E)  $440,000. 
A)  $413,000. 
B)  $428,500. 
C)  $558,500. 
D)  $415,000. 
E)  $440,000.

Question 5

A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

Accepted Answer

\[\begin{array} { l | l | l | l } 
\text

Question 6

Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost.
- If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the total cost that should be assigned to the job?

Accepted Answer

A)  $710 
B)  $600 
C)  $950 
D)  $590 
E)  $380 
A)  $710 
B)  $600 
C)  $950 
D)  $590 
E)  $380

Question 7

A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Finished Goods Inventory account.

Accepted Answer

A) True 
 B)False

Question 8

Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead applied to a job which used $20,000 of direct labor.

Accepted Answer

A)  $8,000. 
B)  $90,000. 
C)  $20,000. 
D)  $70,000. 
E)  $50,000. 
A)  $8,000. 
B)  $90,000. 
C)  $20,000. 
D)  $70,000. 
E)  $50,000.

Question 9

A company's predetermined overhead rate is applied at 130% of direct labor cost. How much overhead would be allocated to Job No. 105 if it required total direct labor costs of $60,000?

Accepted Answer

$60,000 *

Question 10

Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Accepted Answer

A) True 
 B)False

Question 11

If overhead applied is less than actual overhead incurred, it is:

Accepted Answer

A)  Underapplied. 
B)  Expected. 
C)  Overapplied. 
D)  Normal. 
E)  Fully applied. 
A)  Underapplied. 
B)  Expected. 
C)  Overapplied. 
D)  Normal. 
E)  Fully applied.

Question 12

The production activities for a customized product represent a(n):

Accepted Answer

A)  Unit. 
B)  Operation. 
C)  Process. 
D)  Job. 
E)  Pool. 
A)  Unit. 
B)  Operation. 
C)  Process. 
D)  Job. 
E)  Pool.

Question 13

Predetermined overhead rates are calculated before the start of the accounting period, and are therefore based on estimates.

Accepted Answer

A) True 
 B)False

Question 14

The Factory Overhead account will have a debit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

Accepted Answer

A) True 
 B)False

Question 15

A type of production that yields customized products or services for each customer is called:

Accepted Answer

A)  Job order production. 
B)  Job lot production. 
C)  Customer orientation production. 
D)  Process production. 
E)  Just-in-time production. 
A)  Job order production. 
B)  Job lot production. 
C)  Customer orientation production. 
D)  Process production. 
E)  Just-in-time production.

Question 16

A company uses a job order costing system and applies overhead on the basis of direct labor cost. A summary of the company's Work in Process Inventory account for December appears below.
Work in Process
 $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Date } & \text { Explanation } & \text { FR } & \text { Debit } & \text { Credit } & \text { Balance } \
\hline \text { Dec. 1 } & & & & & 73,800 \
\hline \text { Dec. } & \text { Direct Materials } & \text { G-20 } & 235,800 & & 309,600 \
\hline \text { Dec. } & \text { Direct Labor } & \text { G-20 } & 117,000 & & 426,600 \
\hline \text { Dec. } & \text { Factory Overhead } & \text { G-20 } & 187,200 & & 613,800 \
\hline \text { Dec. } & \text { Job No. 5 completed } & \text { G-8 } & & 90,900 & 522,900 \
\hline \text { Dec. } & \text { Job No. 6 completed } & \text { G-10 } & & 131,40 & 391,500 \
& & & & 0 & \
\hline \text { Dec. } & \text { Job No. 7 completed } & \text { G-12 } & & 73,800 & 317,700 \
\hline \text { Dec. 31 } & \text { Job No. 8 completed } & \text { G-15 } & & 168,300 & 149,400 \
& & & &  & \ 
\hline & & & & &
\end{array}$$ Fill in the blanks for the following:
(1) The total cost of the direct materials, direct labor, and factory overhead applied in the December 31 Work in Process inventory is $________.
(2) The company's overhead application rate is ________%
(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had $________ of direct materials cost.
(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had $________ of factory overhead cost.

Accepted Answer

(1) $149,400 (ending balance of account)

Question 17

A_______________ is calculated by relating total estimated factory overhead to an allocation factor such as total estimated direct labor cost, and is used to allocate factory overhead to specific jobs.

Accepted Answer

predetermi

Question 18

Lock Production Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be
$231,000.
(1) If the $28,000 cost of Lock's Work in Process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included?
(2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

Accepted Answer

The answer of Lock Production Co. applies factory overhead to...

Question 19

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

Accepted Answer

A) True 
 B)False

Question 20

Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

Accepted Answer

A) True 
 B)False

Exam 19: Job Order Costing

A ________ accounting system records production activities using a perpetual inventory system.

Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount of applied overhead.

A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Finished Goods Inventory account.

Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead applied to a job which used $20,000 of direct labor.

A company's predetermined overhead rate is applied at 130% of direct labor cost. How much overhead would be allocated to Job No. 105 if it required total direct labor costs of $60,000?

Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

If overhead applied is less than actual overhead incurred, it is:

The production activities for a customized product represent a(n):

Predetermined overhead rates are calculated before the start of the accounting period, and are therefore based on estimates.

The Factory Overhead account will have a debit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

A type of production that yields customized products or services for each customer is called:

A_______________ is calculated by relating total estimated factory overhead to an allocation factor such as total estimated direct labor cost, and is used to allocate factory overhead to specific jobs.

Job order production systems would be appropriate for companies that produce training films for a specific customer or custom-made furniture to be used in a new five-star resort hotel.

Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

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