Exam 4: Job Costing

Moira Company has just finished its first year of operations and must decide which method to use for adjusting cost of goods sold.Because the company used a budgeted indirect-cost rate for its manufacturing operations,the amount that was allocated ($435,000)to cost of goods sold was different from the actual amount incurred ($425,000). Ending balances in the relevant accounts were: Work-in-Process \ 40,000 Finished Coods 80,000 Cost of Goods Sold 680,000 Required: a.Prepare a journal entry to write off the difference between allocated and actual overhead directly to Cost of Goods Sold.Be sure your journal entry closes the related overhead accounts. b.Prepare a journal entry that prorates the write-off of the difference between allocated and actual overhead using ending account balances.Be sure your journal entry closes the related overhead accounts.

Assigning direct costs to a cost object is called ________.

Costs that are subject to short-run fluctuations for given jobs are ________.

Which account would be credited if the following labor wages were incurred in a furniture manufacturing company? Assem bly workers \ 20,000 Janitors \ 10,000

If indirect-cost rates are calculated monthly,distortions might occur because of ________.

Using job costing,the 2014 actual indirect-cost rate is ________.

For each item below indicate the source documents that would most likely authorize the journal entry in a job-costing system. Required: a.direct materials purchased b.direct materials used c.direct manufacturing labor d.indirect manufacturing labor e.finished goods control f.cost of goods sold

The actual indirect-cost rate is calculated by dividing actual total indirect costs by the budgeted total quantity of the cost-allocation base.

Constanza Company has the following balances as of the year ended December 31,2014: Direct Materials Inventory \ 30,000 . WIP Inventory 69,000 . Finished Goods Inventory 99,000 . Underapplied Factory Department Overhead 8,000 . Cost of Goods Sold 149,000 . Additional information is as follows: Cost of direct materials purchased during 2014 \ 82,000 Cost of direct materials requisitioned in 2014 74,000 Cost of goods completed during 2014 204,000 Factory overhead applied (120\% of direct labor) 96,000 Required: a.Compute beginning direct materials inventory. b.Compute beginning WIP inventory. c.Compute beginning finished goods inventory. d.Compute actual factory overhead incurred.

In the service sector ________.

Luke employs 20 professional cleaners.Budgeted costs total $1,800,000 of which $1,550,000 is direct costs.Budgeted indirect costs are $750,000 and actual indirect costs were $795,800.Budgeted professional labor-hours are 1,000,000 and actual hours were 1,218,000.What is the budgeted direct cost-allocation rate?

Job-cost records for Boucher Company contained the following data: Date Date Date Total Cost of Job job No. Started Finished Sold at June 30 220 May 18 June 12 June 20 \ 6,000 221 May 20 June 19 June 21 4,000 222 June 7 July 5 July 12 7,000 223 June 10 June 28 July 1 6,500 224 June 19 July 16 July 25 8,000 Required: a.Compute WIP inventory at June 30. b.Compute finished goods inventory at June 30. c.Compute cost of goods sold for June.

It is appropriate for service organizations such as public accounting firms to use job costing.

Place the following steps in the order suggested by the seven steps used to assign costs to individual jobs: A. Identify indirect costs B. Compute the total cost of the job C. Select cost-allocation bases D. Compute the indirect cost rate

Answer the following questions using the information below: Apple Valley Corporation uses a job cost system and has two production departments, A and B. Budgeted manufacturing costs for the year are: Department A Department B Direct materials \ 700,000 \ 100,000 Direct manufacturing labor \ 200,000 \ 800,000 Manufacturing overhead \ 600,000 \ 400,000 $\text { The actual material and labor costs charged to Job \#432 were as follows: }$ Direct materials: \ 25,000 Direct labor: Department A \ 8,000 Department B \ 12,000 \ 20,000 Apple Valley applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year. -For Department B,the manufacturing overhead allocation rate is ________.

For normal costing,even though the indirect-cost rate is based on actuals,indirect costs are allocated to products based on the normal capacity of the cost-allocation base.

Goods are ready to be sold when their respective costs are debited to work-in-process inventory.

A company may use job costing to assign costs to different product lines and then use process costing to calculate unit costs within each product line.

The cost allocation base ________.

Actual (rather than allocated)manufacturing overhead costs are first recorded in the ________.