Question 1

Which of the following is the correct formula to compute the predetermined overhead rate?

Accepted Answer

A)  Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. 
B)  Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. 
C)  Actual total manufacturing overhead costs divided by estimated total units in the allocation base. 
D)  Estimated total manufacturing overhead costs divided by actual total units in the allocation base. 
A)  Estimated total units in the allocation base divided by estimated total manufacturing overhead costs. 
B)  Estimated total manufacturing overhead costs divided by estimated total units in the allocation base. 
C)  Actual total manufacturing overhead costs divided by estimated total units in the allocation base. 
D)  Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

Question 2

Island Corporation applies overhead based upon machine-hours.Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500.Actual factory overhead was $387,920 and actual machine-hours were 13,150.Required:
a.Compute the overhead application rate.b.Compute the amount of overhead applied to production.c.Determine the amount of over- or underapplied overhead.

Accepted Answer

(a)$30 per machine hour
(b)$39

Question 3

Windham Manufacturing Company employs job costing to account for its costs.There are three production departments,and separate departmental overhead application rates are employed.All jobs generally pass through all three production departments.Data regarding the hourly direct labor rates,overhead application rates,and three jobs on which work was done during the month appear below.Job 611 and Job 613 were completed during the current month,Job 612 was still in process.(CIA Examination adapted)
 $$\begin{array} { | l | r | r | } 
\hline \text { Production } & \begin{array} { r } 
\text { Direct } \
\text { Labor } \
\text { Dept }
\end{array} & \begin{array} { r } 
\text { Manufacturing overhead } \
\text { application rate }
\end{array} \
\hline \text { Cutting } & \$ 14.00 & 40 \% \text { of direct materials } \
\hline \text { Machining } & \$ 20.00 & \$ 10.00 \text { per machine hour } \
\hline \text { Assembly } & \$ 22.00 & 80 \% \text { of direct labor cost } \
\hline
\end{array}$$ 
$$\begin{array} { | l | r | r | r | } 
\hline & \text { Job 611 } & \text { Job 612 } & \text { Job 613 } \
\hline \text { Beginning WIP } & \$ 52,500 & \$ 16,200 & \$ - 0 - \
\hline \text { Direct materials: } & & & \
\hline \text { Cutting } & 50,000 & 32,000 & 76,000 \
\hline \text { Machining } & 4,000 & 7,000 & 19,000 \
\hline \text { Assembly } \
\text { Direct labor hours: } & - 0 - & - 0 - & - 0 - \
\hline \text { Cutting } & 500 & 400 & 600 \
\hline \text { Machining } & 800 & 750 & 850 \
\hline \text { Assembly } & 1,100 & 1,200 & 3,500 \
\hline \text { Machine hours: } & & & \
\hline \text { Cutting } & - 0 - & - 0 - & - 0 - \
\hline \text { Machining } & 2,200 & 1,800 & 3,400 \
\hline \text { Assembly } & 500 & 800 & 750 \
\hline
\end{array}$$
Required:
(a)Compute the completed costs of Job 611 and Job 613.(b)Compute the value of the Work-in-Process Inventory at the end of the month.

Accepted Answer

(a)Job 611: $215,060;Job 613: $323,400

Question 4

Which of the following accounts is debited when direct labor is recorded?

Accepted Answer

A)  Work-in-Process. 
B)  Salaries and wages expense. 
C)  Salaries and wages payable. 
D)  Manufacturing overheaD.
The Work-in-Process account is debited when direct labor is recordeD. 
A)  Work-in-Process. 
B)  Salaries and wages expense. 
C)  Salaries and wages payable. 
D)  Manufacturing overheaD.
The Work-in-Process account is debited when direct labor is recordeD.

Question 5

Stock Co.uses a job order costing system.The following debits (credits)appeared in Stock's work-in-process account for the month of April: Stock applies overhead to production at a predetermined rate of 80% of direct labor cost.Job No.5,the only job still in process on April 30 has been charged with direct labor of $2,000.What was the amount of direct material charged to Job No.5? (CPA adapted)
$$\begin{array} { | r | l | r | } 
\hline \text { April } & \text { Description } & \text { Amount } \
\hline 1 & \text { Balance } & \$ 4,000 \
\hline 30 & \text { Direct materials } & 24,000 \
\hline 30 & \text { Direct labor } & 16,000 \
\hline 30 & \text { Factory overhead } & 12,800 \
\hline 30 & \text { To finished goods } & ( 48,000 ) \
\hline
\end{array}$$

Accepted Answer

A)  $3,000. 
B)  $5,200. 
C)  $8,800. 
D)  $24,000. 
A)  $3,000. 
B)  $5,200. 
C)  $8,800. 
D)  $24,000.

Question 6

Duran Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the total estimated manufacturing overhead was $224,580.At the end of the year,actual direct labor-hours for the year were 18,200 hours,manufacturing overhead for the year was underapplied by $12,100,and the actual manufacturing overhead was $219,580.The predetermined overhead rate for the year must have been closest to:

Accepted Answer

A)  $11.40. 
B)  $12.34. 
C)  $12.06. 
D)  $10.53. 
A)  $11.40. 
B)  $12.34. 
C)  $12.06. 
D)  $10.53.

Question 7

A manufacturing company employs job costing to account for its costs.There are three production departments,and separate departmental overhead application rates are employed because the operations of the departments are so different.All jobs generally pass through all three production departments.Data regarding the hourly direct labor rates,overhead application rates,and three jobs on which work was done during the month appear below.Job 101 and Job 102 were completed during the current month.(CIA Examination adapted)
 $$\begin{array} { | l | r | r | } 
\hline \begin{array} { l } 
\text { Production } \
\text { Departments }
\end{array} & \begin{array} { r } 
\text { Direct } \
\text { Labor Rate }
\end{array} & \begin{array} { r } 
\text { Manufacturing orechead } \
\text { application rates }
\end{array} \
\hline \text { Department 1 } & \$ 12.00 & 50 \% \text { of direct materials } \
\hline \text { Department 2 } & \$ 18.00 & \$ 8.00 \text { per machine hour } \
\hline \text { Department 3 } & \$ 15.00 & 75 \% \text { of direct labor cost } \
\hline
\end{array}$$ 
$$\begin{array} { | l | r | r | r | } 
\hline & \text { Job 101 } & \text { Job 102 } & \text { Job 103 } \
\hline \text { Beginning Work-ir-Process } & \$ 25,500 & \$ 32,400 & \$ - 0 - \
\hline \text { Direct materials: } & & & \
\hline \text { Department 1 } & \$ 40,000 & \$ 26,000 & \$ 58,000 \
\hline \text { Department 2 } & \$ 3,000 & \$ 5,000 & \$ 14,000 \
\hline \text { Department 3 } \
\text { Direct labor hours: } & \$ - 0 - & \$ - 0 - & \$ - 0 - \
\hline \text { Department 1 } & 500 & 400 & 300 \
\hline \text { Department 2 } & 200 & 250 & 350 \
\hline \text { Department 3 } & 1,500 & 1,800 & 2,500 \
\hline \text { Machine hours: } & & & \
\hline \text { Department 1 } & - 0 - & - 0 - & - 0 - \
\hline \text { Department 2 } & 1,200 & 1,500 & 2,700 \
\hline \text { Department 3 } & 1,500 & 1,800 & 2,500 \
\hline
\end{array}$$
Required:
(a)Compute the completed costs of Job 101 and Job 102.(b)Compute the value of the Work-in-Process Inventory at the end of the month.

Accepted Answer

(a)Job 101: $147,075;Job 102: $144,950

Question 8

Indirect material and indirect labor are two examples of manufacturing overhead costs

Accepted Answer

A) True 
 B)False

Question 9

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

Accepted Answer

A) True 
 B)False

Question 10

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.In a job-order costing system,direct labor cost is ordinarily debited to:
$$\begin{array} { | l | r | } 
\hline \text { Direct Materials Inventory } & \$ 12,000 \
\hline \text { Work-ir-Process Inventory } & 4,500 \
\hline \text { Finished Goods Inventory } & 11,000 \
\hline \text { Manufacturing Overhead Control } & 16,500 \
\hline \text { Accounts Payable } & 6,000 \
\hline
\end{array}$$

Accepted Answer

A)  Manufacturing Overhead. 
B)  Cost of Goods Sold. 
C)  Finished Goods. 
D)  Work-in-Process. 
A)  Manufacturing Overhead. 
B)  Cost of Goods Sold. 
C)  Finished Goods. 
D)  Work-in-Process.

Question 11

The management of Grainger Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity rather than on the estimated amount of activity for the year.The company's controller has provided an example to illustrate how this new system would work.In this example,the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 48,000 machine-hours.In addition,capacity is 53,000 machine-hours and the actual activity for the year is 47,700 machine-hours.All of the manufacturing overhead is fixed and is $1,144,800 per year.For simplicity,it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity and the actual amount of manufacturing overhead for the year.Job SUA-600,which required 40 machine-hours,is one of the jobs worked on during the year.Required:
a.Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base.b.Determine how much overhead would be applied to Job SUA-600 if the predetermined overhead rate is based on estimated amount of the allocation base.c.Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base.d.Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity.e.Determine how much overhead would be applied to Job SUA-600 if the predetermined overhead rate is based on the amount of the allocation base at capacity.f.Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the amount of the allocation base at capacity.

Accepted Answer

The answer of The management of Grainger Corporation would like...

Question 12

The balance in the Work-in-Process account equals:

Accepted Answer

A)  the balance in the Finished Goods inventory account. 
B)  the balance in the Cost of Goods Sold account. 
C)  the balances on the job cost sheets of uncompleted jobs. 
D)  the balance in the Manufacturing Overhead account. 
A)  the balance in the Finished Goods inventory account. 
B)  the balance in the Cost of Goods Sold account. 
C)  the balances on the job cost sheets of uncompleted jobs. 
D)  the balance in the Manufacturing Overhead account.

Question 13

Fogel Flight Company uses a job-order costing system.The direct materials for Job #045391 were purchased in September and put into production in October.The job was not completed by the end of October.At the end of October,in what account would the direct material cost assigned to Job #045391 be located?

Accepted Answer

A)  Raw materials inventory. 
B)  Work-in-Process inventory. 
C)  Finished goods inventory. 
D)  Cost of goods manufactureD.
The uncompleted job would be located in Work-in-Process. 
A)  Raw materials inventory. 
B)  Work-in-Process inventory. 
C)  Finished goods inventory. 
D)  Cost of goods manufactureD.
The uncompleted job would be located in Work-in-Process.

Question 14

How does job costing for a service organization differ from job costing for a manufacturer?

Accepted Answer

The only real difference besid

Question 15

In a job costing system,the dollar amount in the journal entry that transfers the costs of jobs from Work-in-Process Inventory to Finished Goods Inventory is the sum of the costs charged to all jobs:

Accepted Answer

A)  sold during the period. 
B)  completed during the period. 
C)  in process during the period. 
D)  started in process during the perioD.
Finished Goods Inventory is charged and Work-in-Process Inventory is relieved for all jobs completed during the perioD. 
A)  sold during the period. 
B)  completed during the period. 
C)  in process during the period. 
D)  started in process during the perioD.
Finished Goods Inventory is charged and Work-in-Process Inventory is relieved for all jobs completed during the perioD.

Question 16

Golden Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the estimated direct labor-hours were 21,600 hours.At the end of the year,actual direct labor-hours for the year were 20,400 hours,the actual manufacturing overhead for the year was $506,920,and manufacturing overhead for the year was underapplied by $23,440.The estimated manufacturing overhead at the beginning of the year used in the predetermined overhead rate must have been:

Accepted Answer

A)  $501,920. 
B)  $531,445. 
C)  $483,480. 
D)  $511,920. 
A)  $501,920. 
B)  $531,445. 
C)  $483,480. 
D)  $511,920.

Question 17

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.What is the ending balance in the Work-in-Process Inventory on June 30?
$$\begin{array} { | l | r | } 
\hline \text { Direct Materials Inventory } & \$ 12,000 \
\hline \text { Work-ir-Process Inventory } & 4,500 \
\hline \text { Finished Goods Inventory } & 11,000 \
\hline \text { Manufacturing Overhead Control } & 16,500 \
\hline \text { Accounts Payable } & 6,000 \
\hline
\end{array}$$

Accepted Answer

A)  $4,800. 
B)  $5,300. 
C)  $9,300. 
D)  $9,800. 
A)  $4,800. 
B)  $5,300. 
C)  $9,300. 
D)  $9,800.

Question 18

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

Accepted Answer

A)  stores control. 
B)  work-in-Process control. 
C)  factory overhead control. 
D)  factory overhead applieD.
Indirect material is overhead-it increases Manufacturing Overhead Control. 
A)  stores control. 
B)  work-in-Process control. 
C)  factory overhead control. 
D)  factory overhead applieD.
Indirect material is overhead-it increases Manufacturing Overhead Control.

Question 19

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead (Control)and credits Work-in-Process inventory.

Accepted Answer

A) True 
 B)False

Question 20

Ardvark Inc.has provided the following data for the month of November.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month.
  
Manufacturing overhead for the month was underapplied by $6,000.The company allocates any underapplied or overapplied overhead among Work-in-Process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.Required:
Determine the cost of Work-in-Process,finished goods,and cost of goods sold AFTER allocation of the underapplied or overapplied overhead for the period.

Accepted Answer

\[\begin{array} { | l | r | r | r | r |

Which of the following is the correct formula to compute the predetermined overhead rate?

Which of the following accounts is debited when direct labor is recorded?

Indirect material and indirect labor are two examples of manufacturing overhead costs

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

The balance in the Work-in-Process account equals:

How does job costing for a service organization differ from job costing for a manufacturer?

In a job costing system,the dollar amount in the journal entry that transfers the costs of jobs from Work-in-Process Inventory to Finished Goods Inventory is the sum of the costs charged to all jobs:

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead (Control)and credits Work-in-Process inventory.

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

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Exam 7: Job Costing

Which of the following is the correct formula to compute the predetermined overhead rate?

Which of the following accounts is debited when direct labor is recorded?

Indirect material and indirect labor are two examples of manufacturing overhead costs

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

The balance in the Work-in-Process account equals:

How does job costing for a service organization differ from job costing for a manufacturer?

In a job costing system,the dollar amount in the journal entry that transfers the costs of jobs from Work-in-Process Inventory to Finished Goods Inventory is the sum of the costs charged to all jobs:

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead (Control)and credits Work-in-Process inventory.

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

Filters