Question 1

Which of the following is not a difference between job costing for service firms and job costing for manufacturing companies?

Accepted Answer

A)  Service firms generally use fewer direct materials than manufacturing companies. 
B)  Service firms' overhead accounts have slightly different titles (e.g. ,Applied Service Overhead). 
C)  Service firms' finished jobs are charged to Cost of Services Billed instead of Cost of Goods Sold. 
D)  Service firms' costs are immediately expensed since all work is completed during a perioD.
Not all service jobs are completed in a perioD.
There may very well be a work-in-process.

Question 2

Which of the following actions do notcause an impropriety in job costing?

Accepted Answer

A)  Misstating the stage of completion. 
B)  Choosing to use normal costing rather than actual costing. 
C)  Charging costs to the wrong job. 
D)  Choosing an allocation method based on the results rather than choosing the method based on resource usage.

Question 3

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the company's Cost of Goods Sold?

Accepted Answer

A)  $164,190.00. 
B)  $139,561.50. 
C)  $252,600.00. 
D)  $214,710.50.

Question 4

The general journal entry to record the issuance of the materials represented by the following materials requisitions for the month includes: $$\begin{array} { | c | c | r | } 
\hline \text { Requisition No. } & \text { Description } & \text { Amount } \
\hline 372 & \text { Job No. } 179 & \$ 5,250 \
\hline 373 & \text { Job No. } 184 & \$ 3,700 \
\hline 374 & \text { Job No. } 180 & \$ 4,525 \
\hline 375 & \text { General factory use } & \$ 725 \
\hline 376 & \text { Job No. } 182 & \$ 2,470 \
\hline
\end{array}$$

Accepted Answer

A)  a debit to Materials Inventory,$15,945. 
B)  a debit to Materials Inventory,$16,670. 
C)  a debit to Work-in-Process Inventory,$15,945. 
D)  a credit to Work-in-Process Inventory,$15,945.

Question 5

Yang Company applies overhead at a rate of $26 per direct labor hour.Budgeted labor hours were 25,000;actual labor hours exceeded the budget by 1,600 hours.Overhead was overapplied by $3,758.Required:
(a)Compute the budgeted overhead for the year.(b)Compute actual overhead for the year.

Accepted Answer

The answer of Yang Company applies overhead at a rate...

Question 6

Two jobs were worked on during the year: Job A-101 and Job A-102.The number of direct labor-hours spent on Job A-101 and Job A-102 were 1,200 and 1,000,respectively.The actual manufacturing overhead was $37,000.What is the amount of the under- or overapplied manufacturing overhead? $$\begin{array} { | l | r | } 
\hline \text { Estimated manufacturing overhead for the year } & \$ 30,000 \
\hline \text { Estimated direct labor hours for the year } & 2,000 \
\hline
\end{array}$$

Accepted Answer

A)  $1,000 underapplied. 
B)  $3,000 overapplied. 
C)  $4,000 underapplied. 
D)  $7,000 overapplieD.
$37,000 - [$15 × (1,200 + 1,000)] = $4,000 underapplied

Question 7

The following selected data were taken from the books of the Owens O-Rings Company.The company uses job costing to account for manufacturing costs.The data relate to April operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows:
C. Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.The end of the month Work-in-Process Inventory balance would be:
$$\begin{array} { | l | r | l | } 
\hline \text { Job 405 } & \$ 11,000 & 3,000 \text { hours } \
\hline \text { Job 406 } & \$ 14,000 & 3,600 \text { hours } \
\hline \text { Job 407 } & \$ 8,000 & 1,900 \text { hours } \
\hline \text { Indirect labor } & \$ 3,700 & \
\hline
\end{array}$$

Accepted Answer

A)  $18,200. 
B)  $24,850. 
C)  $64,100. 
D)  $88,950.

Question 8

Which terms will make the following statement true? When manufacturing overhead is overapplied,the Manufacturing Overhead account has a __________ balance and applied manufacturing overhead is greater than __________ manufacturing overhead.

Accepted Answer

A)  debit,actual 
B)  credit,actual 
C)  debit,estimated 
D)  credit,estimated

Question 9

Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Cost of Goods Sold and Finished Goods and Work-in-Process inventories?

Accepted Answer

A)  The balance in the Work-in-Process account after allocation will be higher if the overapplied overhead is closed out by allocating it to all appropriate accounts. 
B)  The balance in the Work-in-Process account after allocation will be the same under either method. 
C)  Operating income will be higher if all of the overapplied overhead is closed out to Cost of Goods Sold. 
D)  Cost of Goods Sold will be lower if the overapplied overhead is closed out by allocating it to the inventory accounts as well as to Cost of Goods SolD.
Closing an overapplied balance in manufacturing overhead,even prorated to Cost of Goods Sold will cause operating income to be higher.

Question 10

Harkin Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year.Data for the upcoming year appear below:
$$\begin{array} { | l | r | l | } 
\hline \text { Estimated machine-hours } & 73,000 & \
\hline \text { Estimated variable } & \$ 3.49 & \begin{array} { l } 
\text { per machine- } \
\text { hour }
\end{array} \
\hline \begin{array} { l } 
\text { manufacturing overhead } \
\text { manufacturing overhead }
\end{array} & \$ 838,770 & \
\hline
\end{array}$$
Required:
Compute the company's predetermined overhead rate.

Accepted Answer

The answer of Harkin Corporation bases its predetermined overhead rate...

Question 11

The cost in the ending Finished Goods inventory account consists of the direct materials,direct labor,and manufacturing overhead of all jobs still in process at the end of the period.

Accepted Answer

A) True 
 B)False

Question 12

In computing its predetermined overhead rate,Marple Company inadvertently left its indirect labor costs out of the computation.This oversight will cause:

Accepted Answer

A)  Manufacturing Overhead to be overapplied. 
B)  the Cost of Goods Manufactured to be understated. 
C)  the debits to the Manufacturing Overhead account to be understated. 
D)  the ending balance in Work-in-Process to be overstateD.
Not including indirect labor in the Manufacturing Overhead total will result in a lower predetermined overhead rate.When indirect labor is debited to Manufacturing (actual)it will not be relieved (credit).

Question 13

The following selected data were taken from the records of the Fisher Foil Company.The company uses a job costing system to account for its manufacturing costs.Fisher's fiscal year runs from January 1 to December 31;manufacturing overhead is closed out only at the end of the fiscal year.The following information relates to August operations.(1. )Jobs in process on August 1.
 $$\begin{array} { | l | r | r | r | } 
\hline \text { Job No. } & \text { Materials } & \text { Labor } & \text { Overhead } \
\hline \text { W12 } & \$ 800 & \$ 1,200 & ? ? \
\hline \times 13 & 1,000 & 1,620 & ? ? \
\hline
\end{array}$$
(2. )Jobs completed during August: W12,X13,Y14.
(3. )Material requisitions and labor time tickets indicated the following:
 $$\begin{array} { | l | r | r | } 
\hline \text { Job No } & \begin{array} { r } 
\text { Material } \
\text { Requisition }
\end{array} & \begin{array} { r } 
\text { Time } \
\text { Tickets }
\end{array} \
\hline \text { W12 } & \$ 610 & \$ 760 \
\hline \times 13 & 370 & 1,420 \
\hline \text { Y14 } & 2,780 & 3,100 \
\hline 215 & 4,050 & 1,080 \
\hline \text { General usc } & 390 & 540 \
\hline
\end{array}$$
 (4. )Jobs sold during August: W12,X13.
(5. )Fisher applies overhead to production based upon labor costs.
(6. )Selected account balances on August 1 were:
 $$\begin{array} { | l r | l | } 
\hline \text { Overhead } & \$ 1,400 & \text { overapplied } \
\hline \text { Materials } & 5,175 & \
\hline \text { Mork in process } & 9.655 & \
\hline \text { Finished goods } & - 0 & \
\hline
\end{array}$$
 (7. )Various overhead incurred (excluding indirect materials and indirect labor)during August,$13,500.(8. )Materials (direct and indirect)purchased during August,$10,905.
Required:
(a)What is the balance in the Material Inventory account on August 31?
(b)Is the manufacturing overhead account over- or underapplied on August 31? By how much?
(c)Compute the cost of goods manufactured for August.
(d)Compute the cost of goods sold for August.
(e)What is the balance of the Work-in-Process Inventory account on August 31?

Accepted Answer

The answer of The following selected data were taken from...

Question 14

The Focus Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances are known: $$\begin{array} { | l | r | } \hline \text { Direct materials inventory } & \$ 24,000 \ \hline \text { Work-ir-process inventory } & 9,000 \ \hline \text { Finished goods imentory } & 22,000 \ \hline \text { Manufacturing overhead control } & 33,000 \ \hline \text { Accounts payable } & 12,000 \ \hline \end{array}$$ Reviewing old documents and interviewing selected employees have generated the following additional information: The production superintendent's job cost sheets indicated that materials of $5,200 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $12.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $16,000.An analysis of canceled checks indicated payments of $80,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $32,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $168,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $360,000 in manufacturing overhead costs.Required: (a)Compute the Cost of Goods Manufactured.(b)Compute the ending Work-in-process inventory balance.(c)Compute the ending Direct Materials Inventory balance.

Accepted Answer

The answer of The Focus Company does not maintain backup...

Question 15

Which of the following approaches allocates overhead by multiplying an actual overhead rate × actual activity?

Accepted Answer

A)  Actual costing. 
B)  Normal costing. 
C)  Regression costing. 
D)  Standard costing.

Question 16

Job 7890 was recently completed.The following data have been recorded on its job cost sheet:
$$\begin{array} { | l | r | } 
\hline \text { Direct materials } & \$ 45,000 \
\hline \text { Direct labor-hours } & 630 \text { laborhours } \
\hline \text { Direct labor wage rate } & \$ 13 \text { per labor-hour } \
\hline \text { Machine-hours } & 390 \text { machine-hours } \
\hline \text { Number of units completed } & 3,000 \text { units } \
\hline
\end{array}$$ 
The company applies manufacturing overhead on the basis of machine-hours.The predetermined overhead rate is $12 per machine-hour.Required:
Compute the unit product cost that would appear on the job cost sheet for Job 7890.

Accepted Answer

The answer of Job 7890 was recently completed.The following data...

Question 17

Which of the following statements is(are)true regarding product costing? (A)A job is a cost object that can be easily and conveniently distinguished from other cost objects.(B)Job cost sheets are used in accounting systems as a subsidiary ledger for the Work-in-Process account.

Accepted Answer

A)  Only A is true. 
B)  Only B is true. 
C)  Both A and B are true. 
D)  Neither A nor B is true.

Question 18

In June,Robust Engineering worked on three contracts: 1,200 hours for Tico Company,1,100 hours for Navel LLC and 3,400 for Lutron Corp.Robust bills clients at the rate of $150 per hour;labor cost for its engineering staff is $45 per hour.The total number of hours worked in June was 6,000 (any untraced hours are considered overhead),and non-labor overhead costs were $325,000.Overhead is applied to clients at $55 per labor-hour.In addition,Robust had $243,000 in marketing and administrative costs.All transactions are on account.All services were billed.Required:
a.Determine the cost of each of the three jobs.b.What is the amount of over- or underapplied overhead?
c.How much operating profit did Robust make in June? Assume the over- or underapplied overhead is not closed out each month.

Accepted Answer

The answer of In June,Robust Engineering worked on three contracts:...

Question 19

Carlson Corporation applies overhead based upon machine-hours.Budgeted factory overhead was $266,400 and budgeted machine-hours were 18,500.Actual factory overhead was $287,920 and actual machine-hours were 19,050.Before disposition of over- or underapplied overhead,the cost of goods sold was $560,000 and ending inventories were as follows:
$$\begin{array} { | l c | } 
\hline \text { Direct materials } & \$ 60,000 \
\hline \text { MIP } & 190,000 \
\hline \text { Finished goods } & \underline { 250,000 } \
\hline \text { Total } & \$ 500,000 \
\hline
\end{array}$$
Required:
a.Compute the amount of overhead applied to production.b.Prepare the journal entry to dispose of the over/under-applied overhead using the write-off to cost of goods sold approach.c.Prepare the journal entry to dispose of the over/under-applied overhead using the proration approach.

Accepted Answer

The answer of Carlson Corporation applies overhead based upon machine-hours.Budgeted...

Question 20

Perion Corporation uses direct labor-hours in its predetermined overhead rate.At the beginning of the year,the estimated direct labor-hours were 11,200 hours and the total estimated manufacturing overhead was $259,840.At the end of the year,actual direct labor-hours for the year were 10,800 hours and the actual manufacturing overhead for the year was $254,840.Overhead at the end of the year was:

Accepted Answer

A)  $4,280 overapplied. 
B)  $9,280 overapplied. 
C)  $9,280 underapplied. 
D)  $4,280 underapplieD.
See calculation below.

Exam 7: Job Costing

Which of the following is not a difference between job costing for service firms and job costing for manufacturing companies?

Which of the following actions do notcause an impropriety in job costing?

Yang Company applies overhead at a rate of $26 per direct labor hour.Budgeted labor hours were 25,000;actual labor hours exceeded the budget by 1,600 hours.Overhead was overapplied by $3,758.Required: (a)Compute the budgeted overhead for the year.(b)Compute actual overhead for the year.

Which terms will make the following statement true? When manufacturing overhead is overapplied,the Manufacturing Overhead account has a balance and applied manufacturing overhead is greater than manufacturing overhead.

Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Cost of Goods Sold and Finished Goods and Work-in-Process inventories?

The cost in the ending Finished Goods inventory account consists of the direct materials,direct labor,and manufacturing overhead of all jobs still in process at the end of the period.

In computing its predetermined overhead rate,Marple Company inadvertently left its indirect labor costs out of the computation.This oversight will cause:

Which of the following approaches allocates overhead by multiplying an actual overhead rate × actual activity?

Which of the following statements is(are) true regarding product costing? (A) A job is a cost object that can be easily and conveniently distinguished from other cost objects.(B) Job cost sheets are used in accounting systems as a subsidiary ledger for the Work-in-Process account.