Exam 4: Job-Order Costing

The debits to the Manufacturing Overhead account as a consequence of the raw materials transactions in August total:

Clear Colors Corporation uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs. At the beginning of the year the Corporation estimated its total manufacturing overhead cost at $350,000 and its direct labor costs at $200,000. The actual overhead cost incurred during the year was $362,000 and the actual direct labor costs incurred on jobs during the year was $208,000. The manufacturing overhead for the year would be:

The formula for computing the predetermined overhead rate is: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

Hacken Company has a job-order costing system. The company applies manufacturing overhead to jobs using a predetermined overhead rate based on direct labor cost. The information below has been taken from the cost records of Hacken Company for the past year: Required: a. Compute the cost of direct materials purchased during the year. b. Compute the predetermined overhead rate that was used during the past year. c. Compute the Cost of Goods Manufactured for the past year. d. Compute the unadjusted Cost of Goods Sold for the past year.

Allenton 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 31,000 machine-hours and incur $248,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased, $411,000. b. Raw materials were requisitioned for use in production, $409,000 ($388,000 direct and $21,000 indirect). c. The following employee costs were incurred: direct labor, $145,000; indirect labor, $61,000; and administrative salaries, $190,000. d. Selling costs, $148,000. e. Factory utility costs, $12,000. f. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 29,000 machine-hours. h. The cost of goods manufactured for the year was $783,000. i. Sales for the year totaled $1,107,000 and the costs on the job cost sheets of the goods that were sold totaled $768,000. 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.

In computing its predetermined overhead rate, Brady Company included its factory insurance cost twice. This error will result in:

The debits entered in the Raw Materials account during the month of August total:

Quark Spy Equipment manufactures espionage equipment. Quark uses a job-order costing system and applies overhead to jobs on the basis of direct labor-hours. For the current year, Quark estimated that it would work 100,000 direct labor-hours and incur $20,000,000 of manufacturing overhead cost. The following summarized information relates to January of the current year. The raw materials purchased include both direct and indirect materials. Required: Prepare journal entries to record Quark's transactions for the month of January. Do not close out the manufacturing overhead account.

The balance in the Finished Goods inventory account at the beginning of the year was:

Job 231 was recently completed. The following data have been recorded on its job cost sheet: The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $11 per machine-hour. Required: Compute the unit product cost that would appear on the job cost sheet for this job.

When the predetermined overhead rate is based on direct labor-hours, the amount of overhead applied to a job is proportional to the estimated amount of direct labor-hours for the job.

Zelinsky Inc. has provided the following data for the month of April. 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 Corporation 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 manufacturing overhead applied during the month in those accounts. The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for April would include the following:

CR Corporation has the following estimated costs for the next year: CR Corporation estimates that 20,000 labor-hours will be worked during the year. If overhead is applied on the basis of direct labor-hours, the overhead rate per hour will be:

The use of a predetermined overhead rate in a job-order cost system makes it possible to compute the total cost of a job before production is begun.

The operations of Kalispell Company resulted in overapplied manufacturing overhead for the month just completed. Which of the following journal entries can be correct if Kalispell allocates underapplied or overapplied manufacturing overhead among the Work in Process, Finished Goods, and Cost of Goods Sold?

During May at Shatswell Corporation, $57,000 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 $7,000. The journal entry to record this requisition would include a debit to Manufacturing Overhead of:

Hibshman Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 10,000 machine-hours. The estimated variable manufacturing overhead was $6.82 per machine-hour and the estimated total fixed manufacturing overhead was $230,200. The predetermined overhead rate for the recently completed year was closest to:

Spectrum Manufacturing had the following information in its records at the end of the year: What was the balance in Manufacturing Overhead, and when closed what will the effect be on gross margin?

The journal entry to record the requisition from the storeroom would include a:

Schoff Corporation has provided the following data for the most recent month: Required: Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Record the beginning balances and each of the transactions listed above. Finally, determine the ending balances.