Exam 4: Job Costing

Fixed costs remain constant at $400,000 per month.During high-output months variable costs are $320,000,and during low-output months variable costs are $80,000.What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 for low-output months?

Toyz 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 labor-hours in the Assembly Department.At the beginning of 2014,the following estimates were provided for the coming year: Machining Assembly Direct labor-hours (dlh) 10,000 150,000 Machine-hours (mh) 100,000 5,000 Direct labor cost \ 80,000 \ 720,000 Manufacturing overhead costs \ 200,000 \ 450,000 $\text { The accounting records of the company show the following data for Job } \# 897 \text { : }$ Machining Assembly Direct labor-hours (dlh) 50 120 Machine-hours (mh) 170 10 Direct material cost \ 3,000 \ 1,600 Direct labor cost \ 400 \ 1,500 Required: a.Compute the manufacturing overhead allocation rate for each department. b.Compute the total cost of Job #897. c.Provide possible reasons why Toyz Manufacturing uses two different cost allocation rates.

In job costing,only direct costs are used to determine the cost of a job.

When using a normal costing system,manufacturing overhead is allocated using the ________ manufacturing overhead rate and the ________ quantity of the allocation base.

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

Normal costing assigns indirect costs based on an actual indirect-cost rate.

Tiscara Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour.The following data are obtained from the accounting records for June 2014: Direct materials \ 440,000 Direct labor (3,500 hours @ \ 11/ hour) 38,500 Indirect labor 15,000 Plant facility rent 50,000 Depreciation on plant machinery and equipment 35,000 Sales commissions 10,000 Administrative expenses 25,000 The actual amount of manufacturing overhead costs incurred in June 2014 totals ________.

When calculating indirect cost rates,the longer the time period,the greater the influence of seasonal patterns on the amount of costs.

Problems with costing occur when ________.

The following information was gathered for Zeba Company for the year ended December 31,2014 Actual Direct labor-hours 50,000 dlh 60,000 dlh Factory overhead \ 550,000 \ 600,000 Assume that direct labor-hours are the cost-allocation base. Required: a.Compute the budgeted factory overhead rate. b.Compute the factory overhead applied. c.Compute the amount of over/underapplied overhead.

Shotter Manufacturing is a small textile manufacturer using machine-hours to calculate the single indirect-cost rate to allocate manufacturing overhead costs to various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the jackets to be made for Jackson High School Science Olympiad. Company Jackson High School Job Direct materials \ 25,000 \ 600 Direct manufacturing labor \ 5,000 \ 150 Manufacturing overhead costs \ 30,000 Machine-hours (mh) 50,000 800 Required: a.For Shotter Manufacturing,determine the annual manufacturing overhead cost-allocation rate. b.Determine the amount of manufacturing overhead costs allocated to the Jackson High School job. c.Determine the estimated total manufacturing costs for the Jackson High School job.

Answer the following questions using the information below: A local accounting firm employs 20 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 500 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis. Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year. -What is the budgeted indirect-cost rate per hour?

Which of the following items is debited to the Work-in-Process account?

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

When direct materials are requisitioned the ________ account is increased.

A job that shows low profitability may be the result of ________.

Which of the following companies will use a process costing system?

Hammond and Jarrett provide tax consulting for estates and trusts.Their job-costing system has a single direct-cost category (professional labor)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 labor-hours. Required: a.Discuss the reasons a consulting firm might use a normal costing system rather than an actual costing system. b.What might be some reasons for the firm to change from a one-pool to a multiple-pool allocation concept?

A ________ links an indirect cost to a cost object.