Exam 3: Systems Design: Job-Order Costing

The Lee Company uses a job-order costing system. The following data were recorded for June: Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers. -Lee Company's cost of goods sold for June was:

On April 1, Bachler Corporation had $37,000 of raw materials on hand. During the month, the company purchased an additional $75,000 of raw materials. During April, $88,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $6,000. -The journal entry to record the purchase of raw materials would include a:

At the beginning of the year, manufacturing overhead for the year was estimated to be $702,450. At the end of the year, actual direct labor-hours for the year were 33,100 hours, the actual manufacturing overhead for the year was $697,450, and manufacturing overhead for the year was overapplied by $40,680. 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:

Actual manufacturing overhead costs are traced to specific jobs.

If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that:

Which of the following companies would be most likely to use a job-order costing system rather than a process costing system?

Crimp Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 15,000 hours and the total estimated manufacturing overhead was $258,000. At the end of the year, actual direct labor-hours for the year were 13,100 hours and the actual manufacturing overhead for the year was $253,000. Overhead at the end of the year was:

Sweet Company applies overhead to jobs on the basis of 125% of direct labor cost. If Job 107 shows $10,000 of manufacturing overhead applied, how much was the direct labor cost on the job?

Dagnon Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $299,130. At the end of the year, actual direct labor-hours for the year were 17,400 hours, manufacturing overhead for the year was overapplied by $13,850, and the actual manufacturing overhead was $294,130. The predetermined overhead rate for the year must have been closest to:

The following partially completed T-accounts summarize last year's transactions for Kelshaw Company. At the end of the year, the company closes out the balance in the Manufacturing Overhead account to Cost of Goods Sold. -The cost of goods sold (after adjustment for underapplied or overapplied overhead) is:

Lucy Sportswear manufactures a specialty line of T-shirts. The company uses a job-order costing system. During March, the following costs were incurred on Job ICU2: direct materials $13,700 and direct labor $4,800. In addition, selling and shipping costs of $7,000 were incurred on the job. Manufacturing overhead was applied at the rate of $25 per machine-hour and Job ICU2 required 800 machine-hours. If Job ICU2 consisted of 7,000 shirts, the Cost of Goods Sold per shirt was:

Mincks Corporation incurred $64,000 of actual Manufacturing Overhead costs during November. During the same period, the Manufacturing Overhead applied to Work in Process was $61,000. The journal entry to record the application of Manufacturing Overhead to Work in Process would include a:

Harrell Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the year the company estimated its total manufacturing overhead cost at $400,000 and its direct labor-hours at 100,000 hours. The actual overhead cost incurred during the year was $350,000 and the actual direct labor-hours incurred on jobs during the year was 90,000 hours. The manufacturing overhead for the year would be:

Use of a single, plantwide overhead rate is generally appropriate only for very large manufacturing companies.

Some companies use process costing and some use job-order costing. Which method a company uses depends on its industry. A number of companies in different industries are listed below: Custom boat builder Frozen cranberry juice processor Concrete block manufacturer Winery that produces a number of varietal wines Aluminum refiner that makes aluminum ingots from bauxite ore Required: For each company, indicate whether the company is most likely to use job-order costing or process costing.

Roofe Inc. has provided the following data for the month of October. 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 $2,000. 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. -The journal entry to record the allocation of any underapplied or overapplied overhead for October would include the following:

Which of the following documents is used to specify the type and quantity of materials drawn from the storeroom, and identifies the job to which the costs of the materials are to be charged?

Loraine Company applies manufacturing overhead to jobs using a predetermined overhead rate of 70% of direct labor cost. Any underapplied or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month. During August, the following transactions were recorded by the company: -The Cost of Goods Manufactured for August was:

On December 1, Catherman Corporation had $21,000 of raw materials on hand. During the month, the company purchased an additional $61,000 of raw materials. During December, $70,000 of raw materials were requisitioned from the storeroom for use in production. The debits to the Raw Materials account for the month of December total:

Pricton Corporation has a job-order costing system. For the month of April, the following debits (credits) appeared in the Work in Process account: Pricton applies overhead at a predetermined rate of 90% of direct labor cost. Job No. 50, the only job still in process at the end of April, has been charged with manufacturing overhead of $2,250. The amount of direct materials charged to Job No. 50 was: