Exam 18: Costing Systems: Job Order Costing

Pretty Pillows,Mfg. ,manufactures silk throw pillows.Last month the company produced 3,890 pillows.Using job order costing,determine the product unit cost for one pillow based on the following costs: production facility utilities,$1,600;depreciation on production equipment,$650;indirect materials,$400;direct materials,$5,300;indirect labor,$1,000;direct labor,$3,500;sales commissions,$4,000;president's salary,$8,000;insurance on production facility,$1,000;advertising expense,$900;rent on production facility,$6,000;rent on sales office,$4,000;and legal expense,$600.Round your answer to two decimal places.

Job costs in a service organization end up in the Finished Goods Inventory account when a job is completed.

The traditional approach to applying overhead costs to a product or service is to use a(n)

Morgan & Morgan is a small firm that assists clients in the preparation of their tax returns.The firm has five accountants and five researchers,and it uses job order costing to determine the cost of each client's return.The firm is divided into two departments: (1)Preparation and (2)Research & Planning.Each department has its own overhead application rate.The Preparation Department's rate is based on accountant labor costs and Research & Planning is based on the number of research hours.The following is the company's estimates for the current year's operations. Client No.2006-713 was completed during April of the current year and incurred the following costs and hours: a.Compute the overhead rates to be used by both departments. b.Determine the cost of Client No.2006-713,by department and in total.

Managers prepare financial statements to communicate the company's performance to its external users.

Costs assigned to the building of a ship should appear on the income statement when

The production process determines the product costing system needed.

Cardsheet Company The following partially completed T accounts summarize the transactions of Cardsheet Company for last year: -The indirect labor cost is

The following information is available at the end of May: If $72,400 of materials were charged to Job 88's job cost card,how much overhead was applied to Job 88?

The basic document for keeping track of all costs in a job order costing system is a

Lotus Company's actual overhead is greater than the applied overhead.This difference is deemed immaterial.The company records this by debiting Overhead account and crediting Cost of Goods Sold account.Which of the following is true of Lotus Company?

Predetermined overhead rate is calculated by dividing actual overhead costs by actual cost driver activity.

Applied overhead is less than actual overhead incurred during the year.Which of the following journal entries is made to close the Overhead account if this difference is immaterial?

Teddy's To Hug,produces Teddy Bears for heart patients.Last month the company produced 500 bears.Using job order costing,determine the product unit cost for one bear based on the following costs: production facility utilities,$600;depreciation on production equipment,$550;indirect materials,$450;direct materials,$1,300;indirect labor,$900;direct labor,$2,500;sales commissions,$3,000;president's salary,$5,000;insurance on production facility,$700;advertising expense,$600;rent on production facility,$5,000;rent on sales office,$3,000;and legal expense,$300.Round your answer to two decimal places.

Dyana Julian,president of Julian Juices,Inc. ,has approached you with the following questions: "Why must we use the process costing method to compute product unit costs for three lines of fruit juices? Why can't we consider using a job order costing approach?" Prepare a written response to Ms.Julian.

In a job order costing system,indirect labor costs incurred are debited to the Overhead account.

The costs of completed jobs in a service organization is transferred to the

To prepare financial statements at the end of the accounting period,the actual overhead cost for the period and the estimated overhead that was applied during the period must be reconciled in a job order costing system.

If applied overhead exceeds actual overhead,cost of goods sold must be increased by the amount of the overapplied overhead in a job order costing system.

Johnson Technology specializes in graphic design and video production.In October 2014,the company incurred the following costs for providing services to one of its clients. -Johnson Technology's contract with the client discloses 20% profit margin on the cost incurred.Determine the total amount to be received by the company from its client.