194) Selected information for Singh Corp. for the year follows:
Estimated factory overhead………
$132,000
Estimated direct labor hours………
55,000
hours
Estimated machine hours………
41,250
hours
Estimated direct labor cost………
$825,000
Actual factory overhead
incurred during the year……..
$144,000
Calculate the predetermined overhead rate using:
(a) Estimated direct labor hours.
(b) Estimated direct labor cost.
(c) Estimated machine hours.
195) A manufacturing company applies overhead using direct labor cost. The company’s Work
in Process Inventory account has a $15,000 debit balance after all posting is completed, and the
cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor
costs of $3,000. What is the company’s predetermined overhead rate?
102
196) Nutley Company uses a job order cost system and last period incurred $70,000 of overhead
and $100,000 of direct labor. Nutley estimates that its overhead next period will be $65,000. The
company also expects to incur $100,000 of direct labor. If Nutley bases its overhead applied on
direct labor cost, what should be the predetermined overhead rate for the next period?
197) A company’s job order costing system applies overhead based on direct labor cost. The
company’s estimated production costs were: direct labor, $57,600; direct materials, $76,800; and
factory overhead, $9,600. Calculate the company’s predetermined overhead rate.
103
198) The job cost sheet for Job number 83-421 includes the following information:
DIRECT MATERIALS:
7/12 Requisition R88-566: 20 units @ $ 3.50 per unit
7/13 Requisition R88-576: 18 units @ $ 5.00 per unit
7/13 Requisition R88-578: 4 units @ $25.00 per unit
7/14 Requisition R88-591: 40 units @ $ 1.25 per unit
DIRECT LABOR:
7/12 Employee 19: 8 hours @ $ 9.00 per hour
7/13 Employee 19: 6 hours @ $ 9.00 per hour
7/13 Employee 37: 6 hours @ $ 8.00 per hour
7/14 Employee 19: 5 hours @ $ 9.00 per hour
7/14 Employee 92: 5 hours @ $11.00 per hour
FACTORY OVERHEAD: Assigned at 150% of direct labor cost.
What is the total cost of Job number 83-421?
199) The following information about the Zhang Company is available on December 31:
Advertising expense………………………………
$ 28,800
Depreciation of factory equipment………………
42,320
Depreciation of office equipment…………….…
10,800
Direct labor……………………………………..
142,600
Factory utilities…………………………………..
35,650
Interest expense………………………………….
6,650
Inventories, January 1:
Raw materials…………………………………
3,450
Work in process………………………………
17,250
Finished goods…………………………………
35,600
Inventories, December 31:
Raw materials……………………………..…
2,300
Work in process…………………………..…
20,700
Finished goods………………………………
31,050
Raw materials purchases………………………
132,450
Rent on factory building………………………
41,400
Indirect labor…………………………………..
51,750
Sales commissions……………………………..
16,500
The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount
of over- or underapplied overhead.
Factory overhead costs:
Depreciation of factory equipment ……………
Factory utilities ………………………………..
Rent on factory building ………………………
Indirect labor …………………………………..
Total actual factory overhead costs …………..
Overapplied overhead …………………………
200) The predetermined overhead rate for Foster, Inc., is based on estimated direct labor costs of
$400,000 and estimated factory overhead of $500,000. Actual costs incurred were:
Direct materials……………………………..
$240,000
Direct labor…………………………………..
410,000
Indirect materials……………………………
55,000
Indirect labor………………………………..
125,000
Sales commissions………………………….
55,000
Factory depreciation…………………………
170,000
Property taxes, factory………………………
15,000
Factory utilities……………………………..
35,000
Advertising…………………………………..
62,500
Factory equipment rental……………………
110,000
(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.
(b) Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is
not material in amount.
Total actual overhead…………………………..
Overhead applied…………………………….…
Overapplied overhead……………………………
Factory Overhead……………………………………………
201) A company charged the following amounts of overhead to jobs during the current year:
$12,000 to jobs still in process, $42,000 to jobs completed but not sold, and $66,000 to jobs
finished and sold. At year-end, the company’s Factory Overhead account has a credit balance of
$9,000. What entry (if any) should the company make at year-end related to this overhead
balance?
202) Oddley Corp. uses a job order costing system. The following information pertains to costs
applied to jobs during the current year:
Jobs still in process at the end of the year:
$167,000, which includes $65,000 direct labor costs.
Jobs finished and sold during the year:
$395,000, which includes $172,000 direct labor costs.
Jobs finished but unsold during the year:
$103,000, which includes $38,000 direct labor costs.
Oddley Corp.’s predetermined overhead rate is 60% of direct labor cost. At the end of the year,
the company’s records show that $189,000 of actual factory overhead has been incurred.
(a) Determine the amount of overapplied or underapplied overhead.
(b) Prepare the necessary journal entry to close the Factory Overhead account assuming that any
remaining balance is not material.
203) Taylor Corp. uses a job order costing system and worked only on Job 101 during the current
period. Job 101 was sold for $460,000. The following information pertains to costs incurred for
Job 101.
Direct materials
$90,000
Indirect materials
$30,000
Direct labor
$130,000
Indirect labor
$75,000
Depreciation of machinery
$10,000
Factory supplies
$8,000
Overhead rate
90% of direct labor
After adjusting for the amount of over- or underapplied overhead, determine the amount of gross
profit earned during the year.
110
204) At the end of June, job cost sheets for Kennedy Manufacturing show the following total
costs accumulated on three custom jobs:
Job 203
Job 204
Job 205
Direct materials
$32,000
$47,000
$43,000
Direct labor
18,000
22,000
25,000
Overhead
26,100
31,900
36,250
Job 203 was started in production in May and the following costs were assigned to it in May:
direct materials, $12,000; direct labor, $6,000; and overhead $8,700. Jobs 204 and 205 are
started in June. Overhead cost is applied with a predetermined rate based on direct labor cost.
Jobs 203 and 204 are finished in June, and Job 205 will be finished in July. No raw materials are
used indirectly in June. Using this information, answer the following questions assuming the
company’s predetermined overhead rate did not change.
a. What is the total cost of direct materials requisitioned in June for the three jobs?
b. What is the total direct labor cost incurred during June for the three jobs?
c. What predetermined overhead rate is used during June?
d. How much total cost is transferred to finished goods during June?
205) Booth Manufacturing uses a job order costing system that charges overhead to jobs on the
basis of direct material cost. At year-end, the Work in Process Inventory account shows the
following.
Date
Explanation
Debit
Credit
Balance
Dec. 31
Direct materials cost
980,000
980,000
31
Direct labor cost
320,000
1,300,000
31
Overhead costs
637,000
1,937,000
31
To finished goods
1,818,000
119,000
a. Determine the predetermined overhead rate used.
b. Only one job remained in process at December 31. Its direct materials cost is $60,000. How
much direct labor cost and overhead cost are assigned to it?
60,000
206) Franklin Manufacturing uses a job order costing system that charges overhead to jobs on
the basis of direct labor cost. Franklin used the following cost predictions: overhead costs
$1,285,750, and direct labor costs of $695,000. At year-end, the company’s records show that
actual overhead costs for the year are $1,278,800, and actual direct labor costs are $692,000.
a. Determine the predetermined overhead rate for the year.
b. Compute the amount of overapplied or underapplied overhead.
c. Prepare the adjusting entry for over- or underapplied overhead, assuming the amount is
immaterial.
114
207) Drop Anchor takes special orders to manufacture sail boats for high-end customers. Prepare
journal entries to record the transactions below and prepare job cost sheets for September.
a. Purchased raw materials on credit, $145,000.
b. Materials requisitions: Job 240, $48,000; Job 241, $36,000; Job 242, $42,000; indirect
materials were $12,000.
c. Time tickets used to charge labor to jobs: Job 240, $40,000; Job 241, $30,000; Job 242,
$35,000, indirect labor is $25,000.
d. The company incurred the following additional overhead costs: depreciation of factory
building, $70,000; depreciation of factory equipment, $60,000; expired factory insurance,
$10,000; utilities and maintenance cost of $20,000 were paid in cash.
e. Applied overhead to all three jobs. The predetermined overhead rate is 190% of direct labor
cost.
f. Transferred jobs 240 and 242 to Finished Goods Inventory.
g. Sold job 240 for $300,000 for cash.
h. Closed the under- or over-applied overhead account balance.
Job Cost Sheets
240
241
242
Total
For the current month
Direct materials
Direct labor
Applied overhead
Total costs
208) The predetermined overhead rate for Shilling Manufacturing is based on estimated direct
labor costs of $350,000 and estimated factory overhead of $770,000. Actual costs incurred were:
Direct materials……………………………………………………………….
$475,000
Direct labor…………………………………………………………………….
347,000
Indirect materials…………………………………………………………….
78,000
Indirect labor…………………………………………………………………..
143,500
Sales commissions…………………………………………………………..
150,000
Factory depreciation…………………………………………………………
260,000
Property taxes, factory……………………………………………………..
35,000
Factory utilities……………………………………………………………….
65,000
Advertising……………………………………………………………………..
62,500
Factory supervision………………………………………………………….
185,000
a. Calculate the predetermined overhead rate and calculate the overhead applied during the year.
b. Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is
not material in amount.
Actual overhead:
143,500
260,000
35,000
65,000
Total actual overhead
$766,500
Overhead applied
Underapplied overhead
Cost of Goods Sold
209) A ________ accounting system accumulates production costs and assigns them to products
or services.
210) ________, or customized production, produces products in response to customer orders.
211) A ________ is a separate record maintained for each job.
212) The total cost on job cost sheets for all jobs in process equals the amount in the ________
Inventory account.
213) In a job order costing system, raw materials requisitioned as direct materials are debited to
________; indirect materials are debited to ________.
214) When direct labor is assigned to specific jobs, ________ is debited.
215) When indirect labor is recorded, ________ is debited.
216) A ________ is calculated by dividing total estimated factory overhead by an activity base
such as total estimated direct labor cost.
217) When the actual overhead incurred during an accounting period is more than the overhead
applied to jobs, the overhead is said to be ________.
218) Overapplied overhead should be ________ to the Cost of Goods Sold account when closed.