Exam 19: Job Order Cost Accounting

Target cost is calculated as

The collection of cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Goods in Process Inventory account in the general ledger.

A company's file of job cost sheets for finished but unsold jobs equals the balance in the Finished Goods Inventory account.

Bard Manufacturing uses a job order cost accounting system. During one month Bard purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application rate of 150% of direct labor cost. The total manufacturing costs added during the period are:

When factory payroll costs for labor are allocated in a job cost accounting system:

Briefly describe how manufacturing firms dispose of overapplied or underapplied factory overhead.

Alton Company has an overhead application rate of 160% and allocates overhead based on direct materials. During the current period, direct labor is $50,000 and direct materials used are $80,000. Determine the amount of overhead Alton Company should record in the current period.

Key Manufacturing Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000. (1) If the $28,000 cost of Key's goods in process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included? (2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

The production activities for a customized product represent a(n):

The direct materials section of a job cost sheet shows the materials costs assigned to a job, but the direct labor section only shows the total hours of labor allocated to the job.

Bean Company uses a job order cost system and last period incurred $70,000 of overhead and $100,000 of direct labor. Bean estimates that its overhead next period will be $65,000. The company also expects to incur $100,000 of direct labor. If Bean bases its overhead applied on direct labor cost, what should be the overhead allocation rate for the next period?

Job order production systems would be appropriate for companies that produce custom homes, specialized equipment, and special computer systems.

The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

When a job is finished, its job cost sheet is completed and moved from the jobs in process file to the ____________________ file.

Since a predetermined overhead allocation rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

The R&R Company's production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company's factory overhead incurred for August is:

Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

What is a cost accounting system? What are the two basic types of cost accounting systems?

Materials requisitions and time tickets are cost accounting source documents.

Hancock Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Hancock estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Hancock incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.