Exam 4: Job Costing

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: A. Select the cost allocation base B. Compute the indirect cost allocation rate C. Compute the total cost of the job D. Identify the direct costs of the job E. Compute the indirect cost assigned to the job F. Identify and add the indirect costs into one cost pool G. Identify the distinct job that is the cost object

A company employs 25 full-time staff. The company spent $75,000 in advertising in the year (this amount is a period cost with a constant amount spent each year). Budgeted indirect manufacturing costs total $250,000 and the direct labour rate is $15 per hour. Budgeted labour hours were 500,000, and actual labour hours were 524,000. Actual indirect overhead was $274,600. What are the actual and normal indirect-cost rates respectively?

A grouping of individual cost items is called a

A process costing system assigns costs to groups of similar units during a specified time period and then computes the average unit cost.

Actual costing can also be a method of job costing.

What is the appropriate journal entry if $100,000 of materials were purchased on account for the month of August?

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: Required: 1. Compute Trident's indirect cost allocation rate based on labour cost. 2. Compute Trident'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?

Direct costs are traced the same way for actual costing and normal costing.

In a job-costing system, explain why it is necessary to apply indirect costs to production through the use of a manufacturing overhead cost allocation rate.

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 2012: -The amount of manufacturing overhead allocated to all jobs during June 2012 totals

What is the budgeted direct cost rate for dental assistant labour?

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?

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

To smooth seasonal fluctuating levels of output, separate indirect-cost rates should be calculated for each month.

Use the information below to answer the following question(s). World Engines Ltd. manufactures custom engines for use in the lawn and garden equipment industry. The company allocates manufacturing overhead based on machine hours. Selected data for costs incurred for Job 787 are as follows: -What is the total manufacturing cost of Job 787 using budget costing?

A factor used to systematically link an indirect cost to a cost object is called

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 total manufacturing cost of Job 892 using budget costing?

A company currently has 30 full-time employees. Actual time for each employee was as follows: Consumer demand for the company's services is at 100 percent of time available. Each employee receives a salary of $75,000 per year. What is the total actual indirect cost allocation rate if management believes that clients should be charged for the employees' benefits?

Which method for dealing with under/over allocated overhead provides the most accurate inventory and cost of goods sold account balances?