Exam 4: Job Costing

Correct the following journal entry,and explain your changes. To record the cost of machinery repair labour.

A wholesale automobile company that buys and resells cars has the following data for June: Required: a.Compute the costing rates for each cost driver using actual costing. b.Calculate the total cost assigned to the each vehicle sold.

A job cost record (or job cost sheet)is a document where the costs are recorded and accumulated.

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

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?

Managers and accountants collect most of the cost information that goes into their information systems through

Schulz Corporation applies overhead based upon machine-hours.Budgeted factory overhead was $266,400 and budgeted machine-hours were 18,500.Actual factory overhead was $287,920 and actual machine-hours were 19,050.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.

Use the information below to answer the following question(s). Because the Abernathy Company used a budgeted indirect cost allocation rate for its manufacturing operations,the amount allocated ($200,000)was different from the actual amount incurred ($225,000).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 Abernathy Company should use to write-off the difference between allocated and actual overhead using the proration approach based on overhead allocated?

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: 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?

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?

Proration is the equalization of the overhead allocation rates between finished goods inventory and work-in-process inventory.

An accounting firm provides tax consulting for estates and trusts.Their job costing system has a single direct cost category (professional labour)and a single indirect cost pool (research support).The indirect cost pool contains all the costs except direct personnel costs.All budgeted indirect costs are allocated to individual jobs using actual professional labour hours. Required: a.Discuss the reasons a consulting firm might use normal costing in its job system rather than actual costing. b.What might be some ways for the firm to change from a one pool allocation concept?

Sedgewick County Hospital uses a job-costing system for all patients.In June,the nursing care charges for each department and the cost allocation bases of nursing days are as follows: Patient Ms.Graves spent six days in Critical Care and eight days in Special Care during June.The remainder of the 30-day month was spent in the General Care area. Required: a.Determine the budgeted overhead rate for each department. b.What are the total charges to Ms.Graves if she was in the facility the entire month?

For June,manufacturing overhead was

Actual costing systems are commonly found in practice because the indirect cost information is readily available.

Which of the following is part of the approach to computing the budgeted indirect cost allocation rate?

Indell Corporation uses a job costing system.Record the following transactions in Indell Corporation's general journal for the current month: a.Purchased raw materials on account,$24,000. b.Requisitioned $36,900 of direct materials and $7,200 of indirect materials for use in production. c.Factory payroll incurred,$68,000;70% direct labour,30% indirect labour. d.Recorded depreciation expense factory equipment $11,500,and other manufacturing overhead of $31,570 (credit accounts payable). e.Allocated manufacturing overhead costs based on 120% of direct labour cost. f.Cost of completed production for the current month,$103,000. g.Cost of finished goods sold,$81,000;selling price,$125,000 (all sales on account).

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?

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. c.Provide possible reasons why Valley Manufacturing uses predetermined rather than actual indirect manufacturing cost overhead rates.

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