Exam 7: Job Costing

Actual costing does not use a predetermined overhead rate to apply manufacturing overhead costs to jobs completed during the period.

The financial records for the Harrison Manufacturing Company have been destroyed in a fire.The following information has been obtained from a separate set of books maintained by the cost accountant.The cost accountant now asks for your assistance in computing the missing amounts.What is the amount of the materials purchased?

On October 1,the general ledger of Morgan Industries had the following accounts and balances: Materials irn' entory \ 19,200 Mork-in-process inventory 48,750 Finished goods im'entory 8,100 Manufacturing ou'erhead (overapplied) 2,000 The subsidiary ledgers had the following information on October 1: During October,the following costs were incurred on account: Materials \ 46,500 Factory labor 49,000 Manufacturing owerhead 56,350 A summary of the materials requisition slips and the labor time tickets for the month revealed the following distribution: Applicable To Materials Pequisitions Time Tickets Job B81 \ 8,000 \ 4,000 Job B83 5,100 1,700 Job B84 8,600 10,500 Job B85 19,900 16,750 Job B86 12,750 ? General Use ? 4,500 \ 58,250 ? Overhead is applied based upon direct labor cost.Jobs B81,B83,and B84 were for 8,000,6,000 and 4,800 units of product,respectively,and were completed during October.Jobs B80,B81,B82,and B83 were sold on account for $150,000.Required: Prepare T-accounts for a job order cost system,posting the beginning balances and all transactions for the month.Clearly indicate the ending balances for the accounts and label the 'cost of goods manufactured' and 'cost of goods sold' amounts.

Which of the following documents is used as the basis for posting to the direct materials section of the job cost sheet?

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the value of the ending Work-in-Process Inventory?

The management of Atlas 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 19,000 machine-hours.In addition,capacity is 21,000 machine-hours and the actual activity for the year is 18,200 machine-hours.All of the manufacturing overhead is fixed and is $71,820 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.Required: a.Determine the predetermined overhead rate if the predetermined overhead rate is based on the estimated amount of the allocation base.b.Determine the underapplied or overapplied overhead for the year if the predetermined overhead rate is based on the estimated amount of the allocation base.c.Determine the predetermined overhead rate if the predetermined overhead rate is based on the amount of the allocation base at capacity.d.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.

The following cost data relate to the manufacturing activities of Falco Industries during the just completed year: Total actual manufacturing overhead costs incurred (including \ 15,000 of indirect materials) \ 353,000 Purchases of raw materials (both direct and \ 250,000 indirect) Direct labor cost \ 135,000 Inventories: Raw materials, beginning \ 10,000 Raw materials, ending \ 15,000 Work-in-Process, beginning \ 20,000 Work-in-Proc ess, ending \ 35,000 The company uses a predetermined overhead rate to apply manufacturing overhead cost to production.The predetermined overhead rate for the year was $15 per machine-hour.A total of 23,000 machine-hours were recorded for the year. Required: a.Compute the amount of underapplied or overapplied overhead cost for the year.b.Prepare a Schedule of Cost of Goods Manufactured for the year.