Exam 19: Job Order Cost Accounting

Service firms, unlike manufacturing firms, should only use actual costs when determining a selling price for their services.

Job order costing is applicable to manufacturing firms only and not service firms.

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 journal entry to record the application of factory overhead to production is:

A company uses a job order cost accounting system and applies overhead on the basis of direct labor cost. A summary of the company's Goods in Process Inventory account for December appears below. Fill in the blanks for the following: (1) The total cost of the direct materials, direct labor, and factory overhead applied in the December 31 goods in process inventory is $_______________________. (2) The company's overhead application rate is ____________________% (3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had $__________ of direct materials cost. (4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had $__________ of factory overhead cost.