Exam 19: Job Order Cost Accounting

A job cost sheet is useful for developing financial accounting numbers but does not contain information that is useful for managing the production process.

The predetermined overhead allocation rate for Millay Manufacturing is based on estimated direct labor costs of $350,000 and estimated factory overhead of $770,000. Actual costs incurred were:

Large aircraft producers such as McDonnell Douglas normally use:

Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

A company charged the following amounts of overhead to jobs during the current year: $12,000 to jobs still in process, $42,000 to jobs completed but not sold, and $66,000 to jobs finished and sold. At year-end, the company's Factory Overhead account has a credit balance of $9,000, which is not a material amount. What entry (if any) should the company make at year-end related to this overhead balance?

O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company's overhead application rate?

The following calendar year information about the Tahoma Corporation is available on December 31:

Cost accounting systems accumulate costs and then assign them to products or services.

A ______________________ is a separate record maintained for each job.

Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

A company's ending inventory of finished goods has a cost of $35,000 and consists of 750 units. If the overhead applicable to these goods is $8,400, and overhead is applied at the rate of 60% of direct labor, what is the cost of the direct materials used to produce these units?

The predetermined overhead allocation rate is used to allocate overhead cost to jobs.

If a company applies overhead to production with a predetermined rate, a credit balance in the Factory Overhead account at the end of the period means that:

Docksider Boats uses a job order cost accounting system. During one month Docksider purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Docksider incurred a factory payroll of $95,000, paid in cash, of which $25,000 is classified as indirect labor. Docksider uses a predetermined overhead application rate of 170% of direct labor cost. The journal entry to record the allocation of factory payroll to production is:

Wilkes Manufacturing uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following.

PRO, Inc. had the following activities during its most recent period of operations: (a) Purchased raw materials on account for $140,000 (both direct and indirect materials are recorded in the Raw Materials Inventory account). (b) Issued raw materials to production of $130,000 (80% direct and 20% indirect). (c) Incurred and paid factory labor costs of $250,000 cash; allocated the factory labor costs to production (70% direct and 30% indirect). (d) Incurred factory utilities costs of $20,000; this amount is still payable. (e) Applied overhead at 80% of direct labor costs. (f) Recorded factory depreciation, $22,000.

The overhead allocation rate in Frantz Company's job order cost accounting system applies overhead based on direct labor costs. The company's manufacturing costs for the current year were: direct materials, $108,000; direct labor, $144,000; and factory overhead, $18,000. At year-end, the total cost of goods in process is $36,000, which includes $12,000 of direct labor cost. What amount of direct material cost is included in the ending goods in process inventory?

A job cost sheet includes:

A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.

The predetermined overhead allocation rate for Forsythe, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were: