Chapter 02 Job Order Costing Answer Key
True / False Questions
1. A marketing consulting firm would most likely use process costing.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-01 Describe the key differences between job order costing
and process costing.
Topic: Process costing
2. When job order costing is used, costs are accumulated on a job cost sheet.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Manufacturing cost categories
2-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
3. Process costing averages the total cost of the process over the number of
units produced.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Describe the key differences between job order costing
and process costing.
Topic: Process costing
4. Source documents are used to assign all manufacturing costs to jobs.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Manufacturing cost categories
2-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
5. A materials requisition form is used to authorize the purchase of direct
materials.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Materials requisition form
6. A job cost sheet will record the direct materials and direct labor used by the job
but not the manufacturing overhead applied.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Job cost sheet
2-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
7. A predetermined overhead rate is calculated by dividing estimated total
manufacturing overhead cost by estimated total cost driver.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
8. Indirect materials are recorded directly on the job cost sheet.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the purchase and issue of materials
2-4
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
9. When manufacturing overhead is applied to a job, a credit is made to the Work
in Process account.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
10. The total manufacturing cost for a job is based on the amount of applied
overhead using the predetermined overhead rate.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Transfer costs to finished goods inventory and cost of goods sold
2-5
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
11. If there is a debit balance in the Manufacturing Overhead account at the end of
the period, overhead was underapplied.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Calculate overapplied and underapplied manufacturing overhead
12. The most common method for disposing of the balance in Manufacturing
Overhead is to make a direct adjustment to Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-6
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
13. To eliminate underapplied overhead at the end of the year, Manufacturing
Overhead would be debited and Cost of Goods Sold would be credited.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
14. The total amount of cost assigned to jobs that were completed during the year
is the cost of goods sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-7
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
15. In a service firm, the cost associated with time that employees spend on
training, paperwork, and supervision is considered part of manufacturing
overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
Multiple Choice Questions
16. Which of the following types of firms would most likely use process costing?
A. Superior Auto Body & Repair
B. Crammond Custom Cabinets
D. Jackson & Taylor Tax Service
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
2-8
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Learning Objective: 02-01 Describe the key differences between job order costing
and process costing.
Topic: Process costing
17. Which of the following types of firms would most likely use job order costing?
A. Happy-Oh Cereal Company
C. SoooSweet Beverage
D. C-5 Cement Company
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-01 Describe the key differences between job order costing
and process costing.
Topic: Job order costing
2-9
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
18. Which of the following is a characteristic of a manufacturing environment that
would use job order costing?
A. Standardized production
process
B. Continuous manufacturing
C. Homogenous products
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-01 Describe the key differences between job order costing
and process costing.
Topic: Job order costing
2-10
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
19. Which of the following statements is correct?
A. Companies must choose to use either job order costing or process costing;
there is no overlap between the two systems.
B. Companies always use job order costing unless it is prohibitively
expensive.
C. Companies always use process costing unless it is prohibitively expensive.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Describe the key differences between job order costing
and process costing.
Topic: Job order costing
2-11
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
20. The cost of materials used on a specific job is first captured on which source
document?
A. Cost driver sheet
C. Labor time ticket
D. Process cost sheet
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Materials requisition form
21. The source document that captures how much time a worker has spent on
various jobs during the period is a:
A. cost driver sheet.
B. materials requisition form.
D. job cost sheet.
A direct labor time ticket shows how much time a worker has spent on various
jobs each week, as well as the cost of that time.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
2-12
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Difficulty: 1 Easy
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Direct labor time tickets
22. All the costs assigned to an individual job are summarized on a:
A. cost driver sheet.
C. materials requisition form.
D. labor time ticket.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Topic: Job cost sheet
23. A predetermined overhead rate is calculated by dividing:
A. actual manufacturing overhead cost by estimated total cost driver.
B. estimated total cost driver by estimated manufacturing overhead cost.
C. estimated manufacturing overhead cost by actual total cost driver.
2-13
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
24. Manufacturing overhead is applied to each job using which formula?
job
B. Predetermined overhead rate × estimated value of the cost driver for the job
C. Actual overhead rate × estimated value of the cost driver for the job
D. Predetermined overhead rate/actual value of the cost driver for the job
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-14
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
25. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000,
actual labor hours were 21,000. The predetermined manufacturing overhead
rate per direct labor hour would be:
B. $0.05.
C. $20.75.
D. $19.05.
$400,000/20,000 = $20.00 Divide total estimated manufacturing overhead by
the estimated total cost driver for the year to calculate the predetermined
manufacturing overhead rate.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-15
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
26. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000,
actual labor hours were 21,000. The amount of manufacturing overhead
applied to production would be:
A. $400,000.
B. $415,000.
D. $435,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-16
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
27. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. The predetermined overhead rate per direct
labor hour would be:
B. $1.05.
C. $10.75.
D. $10.24.
$200,000/20,000 = $10.00 Divide total estimated manufacturing overhead by
the estimated total cost driver for the year to calculate the predetermined
manufacturing overhead rate.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-17
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
28. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. The amount of manufacturing overhead
applied to production would be:
A. $200,000.
B. $215,000.
D. $225,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-18
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
29. Manufacturing overhead was estimated to be $500,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $450,000, and
actual direct labor hours were 19,000. The predetermined overhead rate per
direct labor hour would be:
A. $22.50.
C. $23.68.
D. $26.32.
$500,000/20,000 = $25.00 Divide total estimated manufacturing overhead by
the estimated total cost driver for the year to calculate the predetermined
manufacturing overhead rate.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-19
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
30. Manufacturing overhead was estimated to be $500,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $450,000, and
actual direct labor hours were 19,000. The amount of manufacturing overhead
applied to production would be:
A. $500,000.
B. $450,000.
C. $427,500.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-20
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
31. Kilt Company had the following information for the year:
Direct materials used $110,000
Direct labor incurred
(5,000 hours)
$150,000
Actual manufacturing
overhead incurred
$166,000
Kilt Company used a predetermined overhead rate of $42.00 per direct labor
hour for the year and estimated that direct labor hours would total 5,500 hours.
Assume the only inventory balance is an ending Work in Process balance of
$17,000. How much overhead was applied during the year?
A. $231,000
B. $150,000
C. $166,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-21
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
32. Sawyer Company had the following information for the year:
Direct materials used $190,000
Direct labor incurred
(7,000 hours)
$245,000
Actual manufacturing
overhead incurred
$273,000
Sawyer Company used a predetermined overhead rate using estimated
overhead of $320,000 and 8,000 estimated direct labor hours. Assume the
only inventory balance is an ending Finished Goods balance of $9,000. How
much overhead was applied during the year?
A. $245,000
B. $273,000
D. $320,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-22
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
33. Jackson Company had the following information for the year:
Direct materials used $295,000
Direct labor incurred
(9,000 hours)
$245,000
Actual manufacturing
overhead incurred
$343,000
Jackson Company used a predetermined overhead rate using estimated
overhead of $320,000 and 8,000 estimated direct labor hours. Assume the
only inventory balance is an ending Finished Goods balance of $19,000. How
much overhead was applied during the year?
A. $245,000
B. $343,000
D. $320,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Topic: Predetermined overhead rates
2-23
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
34. Which of the following represents the cost of materials purchased but not yet
issued to production?
B. Work in Process Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the flow of costs in job order costing
35. Which of the following represents the accumulated costs of incomplete jobs?
A. Raw Materials Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
Work in Process Inventory represents the total cost of jobs that are still in
process or incomplete.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
2-24
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the flow of costs in job order costing
36. Which of the following represents the cost of jobs completed but not yet sold?
A. Raw Materials Inventory
B. Work in Process Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the flow of costs in job order costing
37. Which of the following represents the cost of the jobs sold during the period?
A. Raw Materials Inventory
B. Work in Process Inventory
C. Finished Goods Inventory
2-25
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the flow of costs in job order costing
38. When manufacturing overhead is applied to production, which of the following
accounts is credited?
A. Raw Materials Inventory
B. Work in Process Inventory
C. Finished Goods Inventory
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the flow of costs in job order costing
2-26
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
39. When materials are purchased, which of the following accounts is debited?
B. Work in Process Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the purchase and issue of materials
40. When direct materials are used in production, which of the following accounts
is debited?
A. Raw Materials Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
2-27
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the purchase and issue of materials
41. When direct materials are used in production (as noted by a materials
requisition form), which of the following accounts is credited?
B. Work in Process Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the purchase and issue of materials
2-28
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
42. When units are completed, the cost associated with the job is credited to which
account?
A. Raw Materials Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Transfer costs to finished goods inventory and cost of goods sold
43. When units are sold, the cost associated with the units is credited to which
account?
A. Raw Materials Inventory
B. Work in Process Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
2-29
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Transfer costs to finished goods inventory and cost of goods sold
44. When units are completed, the cost associated with the job is debited to which
account?
A. Raw Materials Inventory
B. Work in Process Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Transfer costs to finished goods inventory and cost of goods sold
2-30
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
45. When units are sold, the cost associated with the units is debited to which
account?
A. Raw Materials Inventory
B. Work in Process Inventory
C. Finished Goods Inventory
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Transfer costs to finished goods inventory and cost of goods sold
2-31
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
46. When materials are placed into production:
A. Raw Materials Inventory is debited if the materials are traced directly to the
job.
B. Work in Process Inventory is debited if the materials are traced directly to
the job.
C. Manufacturing Overhead is debited if the materials are traced directly to the
job.
D. Raw Materials Inventory is credited only if the materials are traced directly
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the purchase and issue of materials
2-32
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
47. If materials being placed into production are not traced to a specific job, debit:
A. Raw Materials Inventory.
B. Work in Process Inventory.
C. Manufacturing Overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
48. In recording the purchase of materials that are not traced to any specific job,
which of the following is correct?
B. Work in Process Inventory would be debited.
C. Manufacturing Overhead would be
debited.
AICPA: FN Measurement
2-33
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record the purchase and issue of materials
49. Which of the following would be used to record the labor cost that is traceable
to a specific job?
A. Raw Materials Inventory would be debited.
C. Manufacturing Overhead would be
debited.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record labor costs
2-34
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
50. Which of the following would be used to record the labor cost that is not
traceable to a specific job?
A. Raw Materials Inventory would be debited.
B. Work in Process Inventory would be debited.
debited.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record labor costs
51. Which of the following would be used to record the usage of indirect
manufacturing resources?
A. Raw Materials Inventory would be debited.
B. Work in Process Inventory would be debited.
debited.
2-35
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
52. Which of the following would be used to record the depreciation of
manufacturing equipment?
A. Raw Materials Inventory would be debited.
B. Work in Process Inventory would be debited.
debited.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
2-36
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
53. Which of the following would be used to record the property taxes on a factory
building?
A. Raw Materials Inventory would be debited.
B. Work in Process Inventory would be debited.
debited.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
2-37
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
54. Which of the following would be used to record the factory supervisor’s
salary?
A. Raw Materials Inventory would be debited.
B. Work in Process Inventory would be debited.
debited.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
55. Which of the following would be used to apply manufacturing overhead to
production for the period?
A. Raw Materials Inventory would be debited.
C. Manufacturing Overhead would be
debited.
2-38
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
56. Which of the following would be used to apply manufacturing overhead to
production for the period?
A. Credit to Raw Materials Inventory.
B. Credit to Work in Process Inventory.
C. Debit to Manufacturing Overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
2-39
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
57. Which of the following would be used to transfer the cost of completed goods
during the period to the Finished Goods account?
A. Credit to Raw Materials Inventory.
C. Debit to Manufacturing Overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Transfer costs to finished goods inventory and cost of goods sold
58. If a company uses a predetermined overhead rate, which of the following
statements is correct?
A. Manufacturing Overhead will be debited for estimated overhead.
B. Manufacturing Overhead will be credited for estimated overhead.
overhead.
2-40
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
59. Which of the following accounts is not affected by applied manufacturing
overhead?
B. Work in Process Inventory
C. Finished Goods Inventory
D. Cost of Goods Sold
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
2-41
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
60. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000, and
actual labor hours were 21,000. The amount debited to the Manufacturing
Overhead account would be:
A. $400,000.
C. $420,000.
D. $435,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
2-42
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
61. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000, and
actual labor hours were 21,000. The amount credited to the Manufacturing
Overhead account would be:
A. $400,000.
B. $415,000.
D. $435,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
2-43
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
62. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. The amount debited to the Manufacturing
Overhead account would be:
A. $200,000.
C. $210,000.
D. $225,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
2-44
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
63. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. The amount credited to the Manufacturing
Overhead account would be:
A. $200,000.
B. $215,000.
D. $225,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
2-45
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
64. Overhead was estimated to be $250,000 for the year along with 20,000 direct
labor hours. Actual overhead was $225,000, and actual direct labor hours were
19,000. The amount debited to the manufacturing overhead account would be:
A. $250,000.
C. $213,750.
D. $237,500.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record actual manufacturing overhead
2-46
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
65. Manufacturing overhead was estimated to be $250,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $225,000, and
actual direct labor hours were 19,000. The amount credited to the
Manufacturing Overhead account would be:
A. $250,000.
B. $225,000.
C. $213,750.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Topic: Record applied manufacturing overhead
2-47
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
66. Overhead costs are overapplied if the amount applied to Work in Process is:
A. greater than estimated overhead.
B. less than estimated overhead.
C. greater than actual overhead incurred.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Calculate overapplied and underapplied manufacturing overhead
67. Overhead costs are underapplied if the amount applied to Work in Process is:
A. greater than estimated overhead.
B. less than estimated overhead.
C. greater than actual overhead incurred.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
2-48
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
manufacturing overhead.
Topic: Calculate overapplied and underapplied manufacturing overhead
68. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000, and
actual labor hours were 21,000. Which of the following would be correct?
A. Overhead is underapplied by $15,000.
B. Overhead is underapplied by $5,000.
D. Overhead is overapplied by
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Calculate overapplied and underapplied manufacturing overhead
2-49
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
69. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. Which of the following would be correct?
A. Overhead is underapplied by $15,000.
C. Overhead is overapplied by $5,000.
D. Overhead is overapplied by
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Calculate overapplied and underapplied manufacturing overhead
2-50
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
70. Manufacturing overhead was estimated to be $250,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $225,000, and
actual direct labor hours were 19,000. Which of the following would be
correct?
A. Overhead is underapplied by $25,000.
B. Overhead is underapplied by $12,500.
$12,500.
D. Overhead is overapplied by
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Calculate overapplied and underapplied manufacturing overhead
2-51
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
71. The most common method for disposing of over or underapplied overhead is
to:
A. recalculate the overhead rate for the period.
B. recalculate the overhead rate for the next period.
C. make a direct adjustment to Work in Process Inventory.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
72. When disposed of, overapplied manufacturing overhead will:
A. increase Cost of Goods Sold.
B. increase Finished Goods.
C. decrease Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
2-52
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
73. When disposed of, underapplied manufacturing overhead will:
B. increase Finished Goods.
C. decrease Cost of Goods Sold.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
74. Underapplied overhead means:
A. too little overhead was applied to raw materials.
B. actual overhead is greater than estimated overhead.
C. finished goods will need to be credited.
2-53
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
75. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000, and
actual labor hours were 21,000. To dispose of the balance in the
Manufacturing Overhead account, which of the following would be correct?
A. Cost of Goods Sold would be credited for
$15,000.
C. Cost of Goods Sold would be debited for $5,000.
D. Cost of Goods Sold would be debited for $15,000.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-54
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
76. Manufacturing overhead was estimated to be $400,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $415,000, and
actual labor hours were 21,000. To dispose of the balance in the
Manufacturing Overhead account, which of the following would be correct?
A. Manufacturing Overhead would be credited for
$5,000.
B. Manufacturing Overhead would be credited for $20,000.
D. Manufacturing Overhead would be debited for $20,000.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-55
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
77. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. To dispose of the balance in the
Manufacturing Overhead account, which of the following would be correct?
A. Cost of Goods Sold would be credited for
$15,000.
B. Cost of Goods Sold would be credited for $5,000.
D. Cost of Goods Sold would be debited for $15,000.
Calculate the predetermined overhead rate by dividing total estimated
manufacturing overhead by estimated direct labor hours. ($200,000/20,000 =
$10.00) Apply manufacturing overhead by multiplying the predetermined rate
by the actual number of direct labor hours. ($10.00 × 21,000 = $210,000)
Since applied overhead ($210,000) on the credit side of the manufacturing
overhead account is less than actual overhead ($215,000) on the debit side of
the manufacturing overhead account, the overhead is underapplied. ($215,000
– $210,000 = $5,000) That is, it has a debit balance. Correct this with a credit
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-56
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
78. Manufacturing overhead was estimated to be $200,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $215,000, and
actual labor hours were 21,000. To dispose of the balance in the
Manufacturing Overhead account, which of the following would be correct?
$5,000.
B. Manufacturing Overhead would be credited for $15,000.
C. Manufacturing Overhead would be debited for $5,000.
D. Manufacturing Overhead would be debited for $15,000.
Calculate the predetermined overhead rate by dividing the estimated total
manufacturing overhead by the estimated direct labor hours. ($200,000/20,000
= $10.00) Apply manufacturing overhead by multiplying the predetermined
overhead rate by the actual direct labor hours. ($10.00 × 21,000 = $210,000)
Since applied overhead ($210,000) on the credit side of the manufacturing
overhead account is less than actual overhead ($215,000) on the debit side of
the manufacturing overhead account, overhead is underapplied. ($215,000 –
$210,000 = $5,000) which means is has a debit balance. To correct this, credit
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-57
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
79. Manufacturing overhead was estimated to be $250,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $225,000, and
actual direct labor hours were 19,000. To dispose of the balance in the
Manufacturing Overhead account, which of the following would be correct?
A. Cost of Goods Sold would be credited for
$25,000.
$12,500.
C. Cost of Goods Sold would be debited for $12,500.
D. Cost of Goods Sold would be debited for $25,000.
Calculate the predetermined overhead rate by dividing total estimated
manufacturing overhead by estimated direct labor hours. ($250,000/20,000 =
$12.50) Apply manufacturing overhead by multiplying the predetermined
overhead rate by the actual direct labor hours. ($12.50 × 19,000 = $237,500).
Since applied overhead ($237,500) on the credit side of the manufacturing
overhead account is greater than actual overhead ($225,000) on the debit side
of the manufacturing overhead account, overhead is overapplied. ($237,500 –
$225,000 = $12,500) with a credit balance. Correct this with a debit to
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-58
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
80. Manufacturing overhead was estimated to be $250,000 for the year along with
20,000 direct labor hours. Actual manufacturing overhead was $225,000, and
actual direct labor hours were 19,000. To dispose of the balance in the
Manufacturing Overhead account, which of the following would be correct?
A. Manufacturing Overhead would be credited for $12,500.
B. Manufacturing Overhead would be credited for $25,000.
D. Manufacturing Overhead would be debited for $25,000.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Dispose of overapplied or underapplied manufacturing overhead
2-59
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
81. Cost of goods manufactured is the amount of cost transferred:
A. out of Finished Goods Inventory and into Cost of Goods Sold.
B. out of Finished Goods Inventory and into Work in Process Inventory.
C. out of Work in Process Inventory and into Manufacturing Overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
82. Cost of goods completed is the same as:
A. Cost of Goods Sold.
B. Work in Process Inventory.
C. Cost of Goods Manufactured.
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
2-60
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
goods sold.
Topic: Prepare the cost of goods manufactured report
83. The Cost of Goods Manufactured Report includes all of the following except:
A. direct materials used.
B. direct labor.
C. actual manufacturing overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
84. The current manufacturing costs include ______ direct labor, ______ direct
materials, and _______ manufacturing overhead.
B. actual; actual; actual
C. estimated; actual; applied
D. estimated; estimated;
2-61
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
85. Cost of goods sold is the amount of cost transferred:
B. out of Work in Process Inventory and into Cost of Goods Sold.
C. out of Work in Process Inventory and into Manufacturing Overhead.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-62
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
86. Ragtime Company had the following information for the year:
Direct materials used $110,000
Direct labor incurred
(5,000 hours)
$150,000
Actual manufacturing
overhead incurred
$166,000
Ragtime Company used a predetermined overhead rate of $35 per direct
labor hour for the year. Assume the only inventory balance is an ending Work
in Process Inventory balance of $17,000. What was cost of goods
manufactured?
A. $260,000
B. $426,000
C. $435,000
Cost of goods manufactured is the sum of direct materials, direct labor, and
applied (not actual) manufacturing overhead, plus the beginning Work in
Process balance, less the ending Work in Process balance. Applied
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-63
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
87. Ragtime Company had the following information for the year:
Direct materials used $110,000
Direct labor incurred
(5,000 hours)
$150,000
Actual manufacturing
overhead incurred
$166,000
Ragtime Company used a predetermined overhead rate of $35 per direct
labor hour for the year. Assume the only inventory balance is an ending Work
in Process Inventory balance of $17,000. What was adjusted cost of goods
sold?
A. $435,000
B. $426,000
C. $418,000
Calculate applied manufacturing overhead = $35 × 5,000 = $175,000.
Calculate cost of goods manufactured = $110,000 + $150,000 + $175,000 +
$0 – $17,000 = $418,000. Calculate overhead balance. Overapplied overhead
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
2-64
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
88. Sawyer Company had the following information for the year:
Direct materials used $190,000
Direct labor incurred
(7,000 hours)
$245,000
Actual manufacturing
overhead incurred
$273,000
Sawyer Company used a predetermined overhead rate using estimated
overhead of $320,000 and 8,000 estimated direct labor hours. Assume the
only inventory balance is an ending Finished Goods Inventory balance of
$9,000. What was cost of goods manufactured?
B. $708,000
C. $755,000
D. $706,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-65
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
89. Sawyer Company had the following information for the year:
Direct materials used $190,000
Direct labor incurred
(7,000 hours)
$245,000
Actual manufacturing
overhead incurred
$273,000
Sawyer Company used a predetermined overhead rate using estimated
overhead of $320,000 and 8,000 estimated direct labor hours. Assume the
only inventory balance is an ending Finished Goods Inventory balance of
$9,000. What was adjusted cost of goods sold?
A. $715,000
B. $708,000
C. $706,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
2-66
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
90. Jenkins Company had the following information for the year:
Direct materials used $295,000
Direct labor incurred
(9,000 hours)
$245,000
Actual manufacturing
overhead incurred
$343,000
Jenkins Company used a predetermined overhead rate using estimated
overhead of $320,000 and 8,000 estimated direct labor hours. Assume the
only inventory balance is an ending Finished Goods Inventory balance of
$19,000. What was cost of goods manufactured?
A. $841,000
B. $860,000
C. $883,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-67
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
91. Jenkins Company had the following information for the year:
Direct materials used $295,000
Direct labor incurred
(9,000 hours)
$245,000
Actual manufacturing
overhead incurred
$343,000
Jenkins Company used a predetermined overhead rate using estimated
overhead of $320,000 and 8000 estimated direct labor hours. Assume the only
inventory balance is an ending Finished Goods Inventory balance of $19,000.
What was adjusted cost of goods sold?
A. $900,000
B. $883,000
C. $881,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
2-68
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
92. McGown Corp. has the following information:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Raw
Materials
Inventory
$20,000 $30,000
Work in
Process
Inventory
$15,000 $18,000
Finished
Goods
Inventory
$30,000 $20,000
Additional information for the year is as follows:
Raw materials
purchases
$100,000
Direct labor $75,000
Manufacturing overhead
applied
$80,000
Indirect materials $0
Compute the direct materials used in production.
A. $20,000
B. $30,000
C. $110,000
93. McGown Corp. has the following information:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Raw
Materials
Inventory
$20,000 $30,000
Work in
Process
Inventory
$15,000 $18,000
Finished
Goods
Inventory
$30,000 $20,000
Additional information for the year is as follows:
Raw materials
purchases
$100,000
Direct labor $75,000
Manufacturing overhead
applied
$80,000
Indirect materials $0
Compute the current manufacturing costs.
B. $255,000
C. $65,000
D. $68,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Appl
2-70
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-71
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
94. McGown Corp. has the following information:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Raw
Materials
Inventory
$20,000 $30,000
Work in
Process
Inventory
$15,000 $18,000
Finished
Goods
Inventory
$30,000 $20,000
Additional information for the year is as follows:
Raw materials
purchases
$100,000
Direct labor $75,000
Manufacturing overhead
applied
$80,000
Indirect materials $0
Compute the cost of goods manufactured.
A. $248,000
C. $265,000
D. $235,000
95. McGown Corp. has the following information:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Raw
Materials
Inventory
$20,000 $30,000
Work in
Process
Inventory
$15,000 $18,000
Finished
Goods
Inventory
$30,000 $20,000
Additional information for the year is as follows:
Raw materials
purchases
$100,000
Direct labor $75,000
Manufacturing overhead
applied
$80,000
Indirect materials $0
Compute the unadjusted cost of goods sold.
A. $133,000
B. $242,000
D. $255,000
2-73
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
2-74
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-75
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
96. Santos Inc. had the following information for the preceding year:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Raw
Materials
Inventory
$40,000 $30,000
Work in
Process
Inventory
$35,000 ??
Finished
Goods
Inventory
$30,000 ??
Additional information for the year is as follows:
Direct materials used $200,000
Direct labor $150,000
Manufacturing overhead
applied
$160,000
Cost of goods
manufactured
$525,000
Cost of goods sold $544,000
What was the ending Work in Process Inventory balance on 12/31?
B. $11,000
C. $50,000
D. $54,000
97. Santos Inc. had the following information for the preceding year:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Raw
Materials
Inventory
$40,000 $30,000
Work in
Process
Inventory
$35,000 ??
Finished
Goods
Inventory
$30,000 ??
Additional information for the year is as follows:
Direct materials used $200,000
Direct labor $150,000
Manufacturing overhead
applied
$160,000
Cost of goods
manufactured
$525,000
Unadjusted cost of
goods sold
$544,000
What was the ending Finished Goods Inventory balance on 12/31?
A. $20,000
C. $50,000
D. $54,000
98. Mendez Inc. had the following information for the preceding year:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Work in
Process
Inventory
?? $35,000
Finished
Goods
Inventory
?? $30,000
Additional information for the year is as follows:
Direct materials used $200,000
Direct labor $150,000
Manufacturing overhead
applied
$160,000
Cost of goods
manufactured
$525,000
Cost of goods sold $544,000
What was the beginning Work in Process Inventory balance on 1/1?
A. $49,000
B. $65,000
D. $69,000
99. Mendez Inc. had the following information for the preceding year:
Beginning
Inventory
(1/1)
Ending
Inventory
(12/31)
Work in
Process
Inventory
?? $35,000
Finished
Goods
Inventory
?? $30,000
Additional information for the year is as follows:
Direct materials used $200,000
Direct labor $150,000
Manufacturing overhead
applied
$160,000
Cost of goods
manufactured
$525,000
Unadjusted cost of
goods sold
$544,000
What was the beginning Finished Goods Inventory balance on 1/1?
B. $65,000
C. $50,000
D. $69,000
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 3 Hard
2-82
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
100. Job order costing systems for companies that compete in, for example, the
green building arena should reflect:
A. only costs in dollars.
B. only sustainability-related metrics.
D. neither costs of materials in dollars nor sustainability-related metrics.
AICPA: BB Resource Management
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-83
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
101. To incorporate sustainability into the Cost of Goods Manufactured report,
include information on all of the following except:
A. the cost of direct materials used compared to standard (non-sustainable)
materials.
C. source information for direct materials
used.
AICPA: BB Resource Management
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
2-84
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
102. Which of the following is incorrect regarding service firms?
B. The accounting system will track the time and resources spent serving a
specific client or account.
C. Managers of service firms need cost information to price their services, to
budget and control costs, and to determine the profitability of different types
of clients.
D. The primary driver used to assign costs is billable hours.
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
2-85
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
103. Service firms:
A. tend to use a lot of direct materials in addition to billable hours.
B. tend to incur few indirect costs that cannot be traced to specific clients or
accounts.
base such as billable hours.
D. use process costing to assign costs to individual clients or accounts.
AICPA: BB Critical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
2-86
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
104. Optimum Finance Inc. provides budget, savings, and investment services to
clients who want a stress-free financial lifestyle. The company customizes a
program for each client based on their individual goals that includes budget
recommendations, investment counseling, and savings techniques. The
company uses a job order cost system that keeps track of the cost of the
amount of time financial consultants spend with each client.
Optimum applies all indirect operating costs (e.g., rent, utilities, and
management salaries) as a percentage of the consultant’s labor cost. During
the most recent year, the firm estimated that it would pay $500,000 to its
consultants and incur indirect operating costs of $750,000. Actual consultant
labor costs were $537,500 and actual indirect operating costs were $725,000.
What is the predetermined overhead rate that Optimum will use for the current
year?
B. $1.35 per dollar of consultant labor cost
C. $0.67 per dollar of consultant labor cost
D. $1.45 per dollar of consultant labor cost
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
2-87
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
105. Optimum Finance Inc. provides budget, savings, and investment services to
clients who want a stress-free financial lifestyle. The company customizes a
program for each client based on their individual goals that includes budget
recommendations, investment counseling, and savings techniques. The
company uses a job order cost system that keeps track of the cost of the
amount of time financial consultants spend with each client.
Optimum applies all indirect operating costs (e.g., rent, utilities, and
management salaries) as a percentage of the consultant’s labor cost. During
the most recent year, the firm estimated that it would pay $500,000 to its
consultants and incur indirect operating costs of $750,000. Actual consultant
labor costs were $537,500 and actual indirect operating costs were $725,000.
During the year, Optimum provided 64 hours of consulting services to Robert
Howard for which Optimum pays an average of $18 per hour. What is the total
cost of providing services to Robert?
A. $2,707
B. $2,822
C. $1,924
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
2-88
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
106. Optimum Finance Inc. provides budget, savings, and investment services to
clients who want a stress-free financial lifestyle. The company customizes a
program for each client based on their individual goals that includes budget
recommendations, investment counseling, and savings techniques. The
company uses a job order cost system that keeps track of the cost of the
amount of time financial consultants spend with each client.
Optimum applies all indirect operating costs (e.g., rent, utilities, and
management salaries) as a percentage of the consultant’s labor cost. During
the most recent year, the firm estimated that it would pay $500,000 to its
consultants and incur indirect operating costs of $750,000. Actual consultant
labor costs were $537,500 and actual indirect operating costs were $725,000.
During the year, Optimum provided 42 hours of consulting services to Joan
Clair for which Optimum pays an average of $20 per hour. What is the total
cost of providing services to Joan?
B. $1,974
C. $2,058
D. $1,403
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
Essay Questions
2-89
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
107. Deer Lake Inc. uses a job order costing system with manufacturing overhead
applied to products at a rate of 150% of direct labor cost. Treating each case
independently, find the missing amounts for a through l:
Case
#1
Case
#2
Case
#3
Direct
materials
used
$20,00
0
e. $10,00
0
Direct labor $25,00
0
f. i.
Manufacturin
g overhead
applied
a. $45,00
0
j.
Total
manufacturin
g costs
b. $95,00
0
$35,00
0
Beginning
Work in
Process
$10,00
0
g. $6,000
Ending Work
in process
$8,000 $10,00
0
k.
Cost of
goods
manufacture
d
c. $93,00
0
$36,00
0
Beginning
Finished
Goods
$12,00
0
$12,00
0
l.
Ending
Finished
Goods
$15,50
0
h. $4,000
Cost of
goods sold
(unadjusted)
d. $91,00
0
$37,00
0
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
2-91
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-92
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-93
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
108. Barone Inc. uses a job order costing system with manufacturing overhead
applied to products at a rate of 100% of direct labor cost. Treating each case
independently, find the missing amounts for a through l:
Case
#1
Case
#2
Case
#3
Direct
materials
used
$20,00
0
e. $10,00
0
Direct labor $20,00
0
f. i.
Manufacturin
g overhead
applied
a. $30,00
0
j.
Total
manufacturin
g costs
b. $80,00
0
$30,00
0
Beginning
Work in
Process
$10,00
0
g. $4,000
Ending Work
in process
$12,00
0
$5,000 k.
Cost of
goods
manufacture
d
c. $79,00
0
$28,00
0
Beginning
Finished
Goods
$12,00
0
$15,00
0
l.
Ending
Finished
Goods
$9,000 h. $15,00
0
Cost of
goods sold
(unadjusted)
d. $81,00
0
$26,00
0
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
2-95
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-96
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-97
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
109. Miller Park Inc. uses a job order costing system with manufacturing overhead
applied to products at a rate of 80% of direct labor cost. Treating each case
independently, find the missing amounts for a through l:
Case
#1
Case
#2
Case
#3
Direct
materials
used
$20,00
0
e. $20,00
0
Direct labor $25,00
0
$20,00
0
i.
Manufacturin
g overhead
applied
a. f. j.
Total
manufacturin
g costs
b. $46,00
0
$38,00
0
Beginning
Work in
Process
$9,000 g. $6,000
Ending Work
in process
$7,000 $6,000 $3,000
Cost of
goods
manufacture
d
c. $45,00
0
k.
Beginning
Finished
Goods
$13,00
0
$8,000 l.
Ending
Finished
Goods
$14,00
0
h. $8,000
Cost of
goods sold
(unadjusted)
d. $48,00
0
$43,00
0
AICPA: FN Measurement
Blooms: Analyze
2-99
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-100
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-101
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
110. Nashville Inc. uses a job order costing system with manufacturing overhead
applied to products at a rate of 200% of direct labor cost. Treating each case
independently, find the missing amounts for a through l:
Case
#1
Case
#2
Case #3
Direct
materials
used
a. e. $20,000
Direct labor $20,00
0
f. $30,000
Manufacturin
g overhead
applied
b. $45,00
0
i.
Total
manufacturin
g costs
$70,00
0
$90,00
0
j.
Beginning
Work in
Process
c. g. $15,000
Ending Work
in process
$10,00
0
$3,000 $17,000
Cost of
goods
manufacture
d
$67,00
0
$94,00
0
k.
Beginning
Finished
Goods
$12,00
0
$14,00
0
l.
Ending
Finished
Goods
d. $12,00
0
$15,000
Cost of
goods sold
(unadjusted)
$63,00
0
h. $113,00
0
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
2-103
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-104
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-105
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
111. Green Cabinets is a custom cabinet builder. They recently completed a set of
kitchen cabinets (Job #1478), as summarized below:
Job Number: #1478
Date started: 4/07/20×5
Date completed: 4/22/20×5
Description: Cherry kitchen cabinets
Applied
Direct
Material
s
Direct Labor Manufacturi
ng Overhead
Re
q
#
Amo
unt
Tic
ket
Ho
urs
Amo
unt
Hou
rs
Ra
te
Amo
unt
38
5
$300 128 16 $288
39
1
225 130 23 426
39
5
150 133 12 264
40
1
215
To
tal
$890 Tot
al
51 $978
Cost Summary
Direct Material Cost $89
0
Direct Labor Cost 978
Applied
Manufacturing
Overhead
Total Cost
Green Cabinets applies overhead to jobs at a rate of $12 per direct labor hour.
a. How much overhead would be applied to Job #1478?
b. What is the total cost of Job #1478?
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-107
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-108
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
112. Russo Cabinets is a custom cabinet builder. They recently completed a set of
kitchen cabinets (Job #1887), as summarized below:
Job Number: #1887
Date started: 4/17/20×5
Date completed: 4/29/20×5
Description: Pecan kitchen cabinets
Applied
Direct
Material
s
Direct Labor Manufacturi
ng Overhead
Re
q
#
Amo
unt
Tic
ket
Ho
urs
Amo
unt
Ho
urs
Ra
te
Amo
unt
38
5
$400 128 18 $396
39
1
325 130 29 696
39
5
250 133 15 390
40
1
415
Tot
al
$1,3
90
Tot
al
62 $1,4
82
Cost Summary
Direct Material Cost $1,
390
Direct Labor Cost 1,4
82
Applied
Manufacturing
Overhead
Total Cost
Russo applies overhead to jobs at a rate of $18 per direct labor hour.
a. How much overhead would be applied to Job #1887?
b. What is the total cost of Job #1887?
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-110
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-111
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
113. Geller Cabinets is a custom cabinet builder. They recently completed a set of
kitchen cabinets (Job #12478), as summarized below:
Job Number: #12478
Date started: 8/05/20×5
Date completed: 8/25/20×5
Description: Butternut kitchen cabinets
Applied
Direct
Material
s
Direct Labor Manufacturi
ng Overhead
Re
q
#
Amo
unt
Tic
ket
Ho
urs
Amo
unt
Hou
rs
Ra
te
Amo
unt
38
5
$400 128 16 $256
39
1
324 130 23 390
39
5
196 133 12 186
40
1
455 141 15 330
To
tal
$1,3
75
Tot
al
66 $1,1
62
Cost Summary
Direct Material Cost $1,3
75
Direct Labor Cost 1,16
2
Applied
Manufacturing
Overhead
Total Cost
Geller applies overhead to jobs at a rate of $15 per direct labor hour.
a. How much overhead would be applied to Job #12478?
b. What is the total cost of Job #12478?
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-113
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-114
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
114. Belton Custom Kitchens is a custom cabinet builder. They recently completed
a set of kitchen cabinets (Job #3097), as summarized below:
Job Number: #3097
Date started: 11/10/20×5
Date completed: 11/27/20×5
Description: Oak kitchen cabinets
Applied
Direct
Material
s
Direct Labor Manufacturi
ng
Overhead
Re
q
#
Amo
unt
Tic
ket
Ho
urs
Amo
unt
Ho
urs
Ra
te
Amo
unt
13
85
$300 212
8
18 $396
13
91
225 213
0
27 621
13
95
150 213
3
14 308
14
01
215 214
4
18 414
Tot
al
$890 Tot
al
77 $1,7
39
Cost Summary
Direct Material Cost $89
0
Direct Labor Cost 1,7
39
Applied
Manufacturing
Overhead
Total Cost
Belton applies overhead to jobs at a rate of $17 per direct labor hour.
a. How much overhead would be applied to Job #3097?
b. What is the total cost of Job #3097?
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-116
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
115. Koebel Corp. uses a job order costing system with manufacturing overhead
applied to products on the basis of direct labor hours. For the upcoming year,
Koebel Corp. estimated total manufacturing overhead cost at $500,000 and
total direct labor hours of 50,000. Koebel Corp. started the year with no
beginning balances in either Work in Process Inventory or Finished Goods
Inventory. During the year, actual manufacturing overhead incurred was
$512,500 and 49,000 direct labor hours were used.
a. Calculate the predetermined overhead rate.
b. Calculate how much manufacturing overhead will be applied to production.
c. Is overhead over or underapplied? By how much?
d. What account should be adjusted for over or underapplied overhead?
Should the balance be increased or decreased?
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Record applied manufacturing overhead
2-117
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
116. Cadburn Corp. uses a job order costing system with manufacturing overhead
applied to products on the basis of direct labor hours. For the upcoming year,
Cadburn Corp. estimated total manufacturing overhead cost at $250,000 and
total direct labor hours of 50,000. During the year actual manufacturing
overhead incurred was $262,500 and 51,000 direct labor hours were used.
a. Calculate the predetermined overhead rate.
b. Calculate how much manufacturing overhead will be applied to production.
c. Is overhead over- or underapplied? By how much?
d. What account should be adjusted for over- or underapplied overhead?
Should the balance be increased or decreased?
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Record applied manufacturing overhead
2-118
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
117. Chloe Corp. uses a job order costing system with manufacturing overhead
applied to products on the basis of direct labor hours. For the upcoming year,
Chloe Corp. estimated total manufacturing overhead cost at $480,000 and
total direct labor hours of 40,000. During the year actual manufacturing
overhead incurred was $462,500 and 41,000 direct labor hours were used.
a. Calculate the predetermined overhead rate.
b. Calculate how much manufacturing overhead will be applied to production.
c. Is overhead over- or underapplied? By how much?
d. What account should be adjusted for over- or underapplied overhead?
Should the balance be increased or decreased?
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Record applied manufacturing overhead
2-119
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
118. Blueberry Corp. uses a job order costing system with manufacturing overhead
applied to products on the basis of machine hours. For the upcoming year,
Blueberry Corp. estimated total manufacturing overhead cost at $270,000 and
total machine hours of 45,000. During the year actual manufacturing overhead
incurred was $258,750 and 46,600 machine hours were used.
a. Calculate the predetermined overhead rate.
b. Calculate how much manufacturing overhead will be applied to production.
c. Is overhead over- or underapplied? By how much?
d. What account should be adjusted for over- or underapplied overhead?
Should the balance be increased or decreased?
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Record applied manufacturing overhead
2-120
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-121
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
119. Curtis Inc. uses a job order costing system. Manufacturing overhead is applied
on the basis of direct labor cost. Total manufacturing overhead was estimated
to be $75,000 for the year; direct labor was estimated to total $150,000.
1/1 12/31
Raw Materials
Inventory
$10,000 $13,000
Work in Process
Inventory
$22,000 $19,000
Finished Goods
Inventory
$34,000 $41,000
The following transactions have occurred during the year.
Raw materials purchases $100,000
Direct materials used $91,000
Direct labor $145,000
Indirect materials used $6,000
Indirect labor $15,000
Factory equipment
depreciation
$24,000
Factory rent $18,000
Factory utilities $7,500
Other factory costs $6,500
a. Calculate the predetermined overhead rate.
b. Calculate cost of goods manufactured.
c. Calculate the over- or underapplied overhead.
d. Calculate adjusted cost of goods sold.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-124
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-125
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
120. Kayla Inc. uses a job order costing system. Manufacturing overhead is applied
on the basis of direct labor cost. Total manufacturing overhead was estimated
to be $150,000 for the year; direct labor was estimated to total $300,000.
1/1 12/31
Raw Materials
Inventory
$20,000 $26,000
Work in Process
Inventory
$44,000 $38,000
Finished Goods
Inventory
$68,000 $82,000
The following transactions have occurred during the year.
Raw materials purchases $200,000
Direct materials used $182,000
Direct labor $290,000
Indirect materials used $12,000
Indirect labor $30,000
Factory equipment
depreciation
$48,000
Factory rent $36,000
Factory utilities $15,000
Other factory costs $13,000
a. Calculate the predetermined overhead rate.
b. Calculate cost of goods manufactured.
c. Calculate the over- or underapplied overhead.
d. Calculate adjusted cost of goods sold.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-128
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-129
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
121. Cadbury Company uses a job order costing system. Manufacturing overhead
is applied on the basis of direct labor cost. Total manufacturing overhead was
estimated to be $120,000 for the year; direct labor was estimated to total
$150,000.
1/1 12/31
Raw Materials
Inventory
$13,000 $10,000
Work in Process
Inventory
$19,000 $22,000
Finished Goods
Inventory
$41,000 $32,000
The following transactions have occurred during the year.
Raw materials purchases $100,000
Direct materials used $91,000
Direct labor $125,000
Indirect materials used $12,000
Indirect labor $18,000
Factory equipment
depreciation
$28,000
Factory rent $22,000
Factory utilities $9,500
Other factory costs $8,500
a. Calculate the predetermined overhead rate.
b. Calculate cost of goods manufactured.
c. Calculate the over- or underapplied overhead.
d. Calculate adjusted cost of goods sold.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-132
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-133
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
122. Ecola Company uses a job order costing system. Manufacturing overhead is
applied on the basis of direct labor cost. Total manufacturing overhead was
estimated to be $120,000 for the year; direct labor was estimated to total
$150,000.
1/1 12/31
Raw Materials
Inventory
$13,000 $10,000
Work in Process
Inventory
$29,000 $22,000
Finished Goods
Inventory
$41,000 $32,000
The following transactions have occurred during the year.
Raw materials purchases $100,000
Direct materials used $87,000
Direct labor $135,000
Indirect materials used $16,000
Indirect labor $19,000
Factory equipment
depreciation
$28,000
Factory rent $15,000
Factory utilities $11,500
Other factory costs $8,500
a. Calculate the predetermined overhead rate.
b. Calculate cost of goods manufactured.
c. Calculate the over or under-applied overhead.
d. Calculate adjusted cost of goods sold.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 02-02 Describe the source documents used to track direct
materials and direct labor costs to the job cost sheet.
Learning Objective: 02-03 Calculate a predetermined overhead rate and use it to
apply manufacturing overhead cost to jobs.
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Job cost sheet
Topic: Predetermined overhead rates
Topic: Prepare the cost of goods manufactured report
Topic: Record applied manufacturing overhead
2-136
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-137
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
123. Josie Inc. has provided the following information for 20×5:
a. Purchased raw materials on account for $120,000.
b. Issued $115,000 in raw materials to production ($22,000 were not traceable
to specific jobs).
c. Incurred $115,000 in direct labor costs (14,375 hours) and $62,500 in
supervision costs (paid in cash).
d. Incurred the following additional manufacturing overhead costs: factory
lease $24,000 (paid in cash); depreciation on equipment $20,000; custodial
supplies $7,500 (paid in cash).
e. Incurred the following nonmanufacturing costs, both paid in cash:
advertising $75,000; sales commissions $88,000.
f. Applied manufacturing overhead to jobs in process at a rate of $10 per
direct labor hour.
g. Completed jobs costing a total of $345,000.
h. Sold jobs for $425,000 on account. The cost of the jobs was $342,000.
i. Closed the Manufacturing Overhead account balance.
Prepare the journal entries to record these transactions.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-S1 Prepare journal entries to record the flow of
manufacturing and nonmanufacturing costs in a job order cost system.
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Journal entries for job order costing
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
Topic: Record the purchase and issue of materials
2-140
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-141
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
124. Frontier Inc. has provided the following information for 20x5:
a. Purchased raw materials on account for $240,000.
b. Issued $230,000 in raw materials to production ($32,000 were not traceable
to specific jobs).
c. Incurred $242,000 in direct labor costs (24,120 hours) and $92,500 in
supervision costs (paid in cash).
d. Incurred the following additional manufacturing overhead costs: factory
utilities $24,000 (paid in cash); depreciation on equipment $45,000; indirect
supplies $17,500 (paid in cash).
e. Incurred the following nonmanufacturing costs, both paid in cash:
advertising $75,000; sales salaries $88,000.
f. Applied manufacturing overhead to jobs in process at a rate of $9 per direct
labor hour.
g. Completed jobs costing a total of $644,000.
h. Sold jobs for $856,000 on account. The cost of the jobs was $642,000.
i. Closed the manufacturing overhead account balance.
Prepare the journal entries to record these transactions.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-S1 Prepare journal entries to record the flow of
manufacturing and nonmanufacturing costs in a job order cost system.
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Journal entries for job order costing
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
Topic: Record the purchase and issue of materials
2-144
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-145
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
125. Northwest Inc. has provided the following information for 20×5:
a. Purchased raw materials on account for $150,000.
b. Issued $130,000 in raw materials to production ($34,000 were not traceable
to specific jobs).
c. Incurred $144,000 in direct labor costs (14,120 hours) and $62,500 in
supervision costs (paid in cash).
d. Incurred the following additional manufacturing overhead costs: factory
lease $36,000 (paid in cash); depreciation on equipment $30,000; indirect
supplies $13,500 (paid in cash).
e. Incurred the following nonmanufacturing costs, both paid in cash:
advertising $45,000; sales commissions $48,000.
f. Applied manufacturing overhead to jobs in process at a rate of $13 per
direct labor hour.
g. Completed jobs costing a total of $415,000.
h. Sold jobs for $625,000 on account. The cost of the jobs was $412,000.
i. Closed the Manufacturing Overhead account balance.
Prepare the journal entries to record these transactions.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-S1 Prepare journal entries to record the flow of
manufacturing and nonmanufacturing costs in a job order cost system.
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Journal entries for job order costing
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
Topic: Record the purchase and issue of materials
2-148
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-149
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
126. Shellenback Inc. has provided the following information for 20×5:
a. Purchased raw materials on account for $200,000.
b. Issued $185,000 in raw materials to production ($12,000 were not traceable
to specific jobs).
c. Incurred $155,000 in direct labor costs (14,750 hours), $52,500 in
supervision costs (paid in cash).
d. Incurred the following additional manufacturing overhead costs: factory
lease $22,000 (paid in cash); depreciation on equipment $26,000; factory
utilities $13,500 (paid in cash).
e. Incurred the following nonmanufacturing costs, both paid in cash:
advertising $55,000; sales commissions $58,000.
f. Applied manufacturing overhead to jobs in process at a rate of $9 per direct
labor hour.
g. Completed jobs costing a total of $457,000.
h. Sold jobs for $735,000 on account. The cost of the jobs was $441,000.
i. Closed the manufacturing overhead account balance.
Prepare the journal entries to record these transactions.
AICPA: FN Measurement
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-S1 Prepare journal entries to record the flow of
manufacturing and nonmanufacturing costs in a job order cost system.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Journal entries for job order costing
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
Topic: Record the purchase and issue of materials
2-152
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-153
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
127. Highview Corp. applies manufacturing overhead to production at 125% of
direct labor cost. During 20×5, manufacturing overhead of $100,000 was
applied to production; actual manufacturing overhead was $109,000.
Beginning Work in Process Inventory was $15,000 and beginning Finished
Goods Inventory was $35,000. Work in Process Inventory increased by 10%
during the year and Finished Goods Inventory decreased by 20% during the
year. Sales for 20×5 were $450,000, yielding a $130,000 gross profit.
Complete the following schedule:
Direct materials used in
production
Direct labor
Manufacturing overhead
applied
Current manufacturing
costs
Beginning Work in
Process Inventory
Ending Work in
Process Inventory
Cost of goods
manufactured
Beginning Finished
Goods Inventory
Ending Finished
Goods Inventory
Unadjusted Cost of
Goods Sold
Overhead adjustment
Adjusted Cost of Goods
Sold
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
2-155
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
Topic: Record the purchase and issue of materials
2-156
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-157
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
128. Oscar Corp. applies manufacturing overhead to production at 150% of direct
labor cost. During 20×5, manufacturing overhead of $180,000 was applied to
production; actual manufacturing overhead was $199,000. Beginning Work in
Process Inventory was $20,000 and ending Work in Process Inventory was
$24,000. Beginning Finished Goods Inventory was $42,000, ending Finished
Goods Inventory was $39,000. Sales for 20×5 were $580,000, yielding a
$117,000 gross profit.
Complete the following schedule:
Direct materials used in
production
Direct labor
Manufacturing overhead
applied
Current manufacturing
costs
Beginning Work in
Process Inventory
Ending Work in
Process Inventory
Cost of goods
manufactured
Beginning Finished
Goods Inventory
Ending Finished
Goods Inventory
Unadjusted Cost of
Goods Sold
Overhead adjustment
Adjusted Cost of Goods
Sold
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
2-159
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
Topic: Record the purchase and issue of materials
2-160
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-161
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
129. Superior Corp. applies manufacturing overhead to production at 75% of direct
labor cost. During 20×5, manufacturing overhead of $150,000 was applied to
production; actual manufacturing overhead was $156,000. Ending Work in
Process Inventory was $22,000 and ending Finished Goods Inventory was
$36,000. Work in Process Inventory increased by 10% during the year and
Finished Goods Inventory increased by 20% during the year. Unadjusted Cost
of Goods Sold was $575,000.
Complete the following schedule:
Direct materials used in
production
Direct labor
Manufacturing overhead
applied
Current manufacturing
costs
Beginning Work in
Process Inventory
Ending Work in
Process Inventory
Cost of goods
manufactured
Beginning Finished
Goods Inventory
Ending Finished
Goods Inventory
Unadjusted Cost of
Goods Sold
Overhead adjustment
Adjusted Cost of Goods
Sold
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
2-163
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Topic: Record the purchase and issue of materials
2-164
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2-165
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
130. Christine Corp. applies manufacturing overhead to production at 80% of direct
labor cost. During 20×5, manufacturing overhead of $200,000 was applied to
production; actual manufacturing overhead was $189,000. Beginning Work in
Process Inventory was $25,000, and beginning Finished Goods Inventory was
$45,000. Work in Process Inventory decreased by 20% during the year and
Finished Goods Inventory decreased by 10% during the year. Adjusted Cost of
Goods Sold was $623,500 for 20×5.
Complete the following schedule:
Direct materials used in
production
Direct labor
Manufacturing overhead
applied
Current manufacturing
costs
Beginning Work in
Process Inventory
Ending Work in
Process Inventory
Cost of goods
manufactured
Beginning Finished
Goods Inventory
Ending Finished
Goods Inventory
Unadjusted Cost of
Goods Sold
Overhead adjustment
Adjusted Cost of Goods
Sold
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-04 Describe how costs flow through the accounting system
in job order costing.
Learning Objective: 02-05 Calculate and dispose of overapplied or underapplied
manufacturing overhead.
Learning Objective: 02-06 Calculate the cost of goods manufactured and cost of
goods sold.
Topic: Calculate overapplied and underapplied manufacturing overhead
Topic: Dispose of overapplied or underapplied manufacturing overhead
Topic: Prepare the cost of goods manufactured report
Topic: Record actual manufacturing overhead
Topic: Record applied manufacturing overhead
Topic: Record labor costs
2-167
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Topic: Record the purchase and issue of materials
131. Pinnacle Consulting employs two CPAs, each having a different area of
specialization. Judy specializes in tax consulting and Steve specializes in
management consulting. Pinnacle expects to incur total overhead costs of
$519,750 during the year and applies overhead based on annual salary costs.
Judy is a senior partner, her annual salary is $225,000, and she is expected to
bill 2,000 hours during the year. Steve is a senior associate, his annual salary
is $121,500, and he is expected to bill 1,800 hours during the year.
a. Calculate the predetermined overhead rate.
b. Assuming that the hourly billing rate should be set to cover the total cost of
services plus a 20% markup, compute the hourly billing rates for Judy and
Steve.
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
2-168
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
132. Ace Architects employs two architects, each having a different area of
specialization. Caitlin specializes in industrial commercial construction and
Zachary specializes in residential construction. Ace expects to incur total
overhead costs of $779,625 during the year and applies overhead based on
annual salary costs. Caitlin is a senior partner, her annual salary is $168,750,
and she is expected to bill 2,000 hours during the year. Zachary is a senior
associate, his annual salary is $91,125, and he is expected to bill 1,800 hours
during the year.
a. Calculate the predetermined overhead rate.
b. Assuming that the hourly billing rate should be set to cover the total cost of
services plus a 20% markup, compute the hourly billing rates for Caitlin and
Zachary.
AICPA: FN Measurement
Blooms: Analyze
Difficulty: 3 Hard
Learning Objective: 02-07 Apply job order costing to a service setting.
Topic: Job order costing in a service firm
2-169
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.