Exam 2: Job-Order Costing

The Donaldson Company uses a job-order costing system.The following data were recorded for July: Overhead is applied to jobs at the rate of 80% of direct materials cost.Jobs 475,477,and 478 were completed during July and transferred to finished goods.Jobs 475 and 478 have been delivered to the customer.Donaldson's Work in Process inventory balance on July 31 was:

The use of predetermined overhead rates in a job-order cost system makes it possible to estimate the total cost of a given job as soon as production is completed.

Sandler Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.Data for the upcoming year appear below: Required: Compute the company's predetermined overhead rate.

Wert Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.Last year,the company's estimated manufacturing overhead was $1,200,000 and its estimated level of activity was 50,000 direct labor-hours.The company's direct labor wage rate is $12 per hour.Actual manufacturing overhead amounted to $1,240,000,with actual direct labor cost of $650,000.For the year,manufacturing overhead was:

At the beginning of the year,manufacturing overhead for the year was estimated to be $267,500.At the end of the year,actual direct labor-hours for the year were 22,100 hours,the actual manufacturing overhead for the year was $262,500,and manufacturing overhead for the year was overapplied by $13,750.If the predetermined overhead rate is based on direct labor-hours,then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been:

Leija Manufacturing Company uses a job-order costing system and started the month of March with one job in process (Job #359). This job had $500 of cost assigned to it at this time. During March, Leija assigned production costs as follows to the jobs worked on during the month: During March, Leija completed and sold Job #359. Job #360 was also completed but was not sold by month end. Job #361 was not completed by the end of March. -What is Leija's cost of goods manufactured for March?

Alam Company is a manufacturing firm that uses job-order costing.At the beginning of the year,the company's inventory balances were as follows: The company applies overhead to jobs using a predetermined overhead rate based on machine-hours.At the beginning of the year,the company estimated that it would work 45,000 machine-hours and incur $180,000 in manufacturing overhead cost.The following transactions were recorded for the year: a.Raw materials were purchased,$416,000. b.Raw materials were requisitioned for use in production,$420,000 ($380,000 direct and $40,000 indirect). c.The following employee costs were incurred: direct labor,$414,000;indirect labor,$60,000;and administrative salaries,$212,000. d.Selling costs,$141,000. e.Factory utility costs,$20,000. f.Depreciation for the year was $81,000 of which $73,000 is related to factory operations and $8,000 is related to selling,general,and administrative activities. g.Manufacturing overhead was applied to jobs.The actual level of activity for the year was 48,000 machine-hours. h.The cost of goods manufactured for the year was $1,004,000. i.Sales for the year totaled $1,416,000 and the costs on the job cost sheets of the goods that were sold totaled $989,000. j.The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold. Required: Prepare the appropriate journal entry for each of the items above (a.through j. ).You can assume that all transactions with employees,customers,and suppliers were conducted in cash.

During October,Crusan Corporation incurred $62,000 of direct labor costs and $4,000 of indirect labor costs.The journal entry to record the accrual of these wages would include a:

Snappy Company has a job-order costing system and uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Manufacturing overhead cost and direct labor hours were estimated at $100,000 and 40,000 hours, respectively, for the year. In July, Job #334 was completed at a cost of $5,000 in direct materials and $2,400 in direct labor. The labor rate is $6 per hour. By the end of the year, Snappy had worked a total of 45,000 direct labor-hours and had incurred $110,250 actual manufacturing overhead cost. -Snappy's manufacturing overhead for the year was:

Dobrinski Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year.At the beginning of the most recently completed year,the company estimated the labor-hours for the upcoming year at 13,000 labor-hours.The estimated variable manufacturing overhead was $2.35 per labor-hour and the estimated total fixed manufacturing overhead was $156,130. Required: Compute the company's predetermined overhead rate.

Period costs are expensed as incurred,rather than going into the Work in Process account.

Under a job-order cost system the Work in Process account is debited with the cost of materials purchased.

The following partially completed T-accounts summarize transactions for Fabatz Company during the year: -The Cost of Goods Manufactured was:

If manufacturing overhead applied exceeds the actual manufacturing overhead costs of the period,then manufacturing overhead is overapplied.

Gest Inc.has provided the following data for the month of November.The balance in the Finished Goods inventory account at the beginning of the month was $49,000 and at the end of the month was $45,000.The cost of goods manufactured for the month was $226,000.The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work in Process was $70,000.The adjusted cost of goods sold that would appear on the income statement for November is:

Graeser Inc.has provided the following data for the month of May.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 overapplied by $4,000. The company allocates any underapplied or overapplied manufacturing 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. The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for May would include the following:

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

Kelson Company applies overhead to jobs on the basis of 60% of direct labor cost.If Job 201 shows $27,000 of manufacturing overhead applied,the direct labor cost on the job was:

In computing its predetermined overhead rate,Marple Company inadvertently left its indirect labor costs out of the computation.This oversight will cause:

The balance in the Work in Process account equals: