30) At January 1, 2012, Feldstein Manufacturing Company had a beginning balance in Work in process of $80,000
and a beginning balance in Finished goods of $20,000. During the year, Feldstein incurred manufacturing costs of
$350,000.
During the year, the following transactions occurred:
Job A-12, was completed for a total cost of $120,000, and was sold for $125,000.
Job A-13, was completed for a total cost of $200,000, and was sold for $210,000.
Job A-15, was completed for a total cost $60,000, but was not sold as of year-end.
The Manufacturing overhead account had a preliminary credit balance of $12,000, and was cleared to zero at year–
end.
What was the final balance in the Cost of goods sold account?
A) $308,000 debit balance
B) $332,000 debit balance
C) $320,000 debit balance
D) $12,000 credit balance
31) At January 1, 2012, Feldstein Manufacturing Company had a beginning balance in Work in process of $80,000
and a beginning balance in Finished goods of $20,000. During the year, Feldstein incurred
manufacturing costs of $350,000.
During the year, the following transactions occurred:
Job A-12, was completed for a total cost of $120,000, and was sold for $125,000.
Job A-13, was completed for a total cost of $200,000, and was sold for $210,000.
Job A-15, was completed for a total cost $60,000, but was not sold as of year-end.
The Manufacturing overhead account had a preliminary credit balance of $12,000, and was cleared to zero at year–
end.
What was the amount of gross profit reported by Feldstein at the end of the year?
A) $2,000
B) $27,000
C) $3,000
D) $15,000
32) Jorst Manufacturing Company began business on January 1, 2012. During its first year of operation, Jorst
worked on 5 industrial jobs, and reported the following information at year-end:
Job 1
Job 2
Job 3
Job 4
Job 5
Direct Materials
1,000
7,500
4,000
3,500
1,500
Direct Labor
12,000
20,000
13,000
12,000
800
Allocated Mfg. Overhead
1,500
6,000
2,500
7,500
200
Job completed:
Jun 30
Sep 1
Oct 15
Nov 1
Not completed
Job sold:
Jul 10
Sep 12
Not sold
Not sold
N/A
Revenues:
25,000
39,000
N/A
N/A
N/A
At year-end, what was the balance in Work in process?
A) $2,500
B) $25,500
C) $45,000
D) $15,500
33) Jorst Manufacturing Company began business on January 1, 2012. During its first year of operation, Jorst
worked on 5 industrial jobs, and reported the following information at year-end:
Job 1
Job 2
Job 3
Job 4
Job 5
Direct Materials
1,000
7,500
4,000
3,500
1,500
Direct Labor
12,000
20,000
13,000
12,000
800
Allocated Mfg. Overhead
1,500
6,000
2,500
7,500
200
Job completed:
Jun 30
Sep 1
Oct 15
Nov 1
Not completed
Job sold:
Jul 10
Sep 12
Not sold
Not sold
N/A
Revenues:
25,000
39,000
N/A
N/A
N/A
At year-end, what was the balance in Finished goods?
A) $90,500
B) $19,500
C) $42,500
D) $45,000
34) Jorst Manufacturing Company began business on January 1, 2012. During its first year of operation, Jorst
worked on 5 industrial jobs, and reported the following information at year-end:
Job 1
Job 2
Job 3
Job 4
Job 5
Direct Materials
1,000
7,500
4,000
3,500
1,500
Direct Labor
12,000
20,000
13,000
12,000
800
Allocated Mfg. Overhead
1,500
6,000
2,500
7,500
200
Job completed:
Jun 30
Sep 1
Oct 15
Nov 1
Not completed
Job sold:
Jul 10
Sep 12
Not sold
Not sold
N/A
Revenues:
25,000
39,000
N/A
N/A
N/A
Jorst’s allocation of overhead costs left a debit balance of $1,200 in the Manufacturing overhead account which was
adjusted to zero at year-end. What was the final balance in Cost of goods sold?
A) $48,000
B) $49,200
C) $46,800
D) $91,700
35) Jorst Manufacturing Company began business on January 1, 2012. During its first year of operation, Jorst
worked on 5 industrial jobs, and reported the following information at year-end:
Job 1
Job 2
Job 3
Job 4
Job 5
Direct Materials
1,000
7,500
4,000
3,500
1,500
Direct Labor
12,000
20,000
13,000
12,000
800
Allocated Mfg. Overhead
1,500
6,000
2,500
7,500
200
Job completed:
Jun 30
Sep 1
Oct 15
Nov 1
Not completed
Job sold:
Jul 10
Sep 12
Not sold
Not sold
N/A
Revenues:
25,000
39,000
N/A
N/A
N/A
Jorst’s allocation of overhead costs left a debit balance of $1,200 in the Manufacturing overhead account which was
adjusted to zero at year-end. What was the amount of gross profit earned in 2012?
A) $14,800
B) $16,000
C) $17,200
D) $1,700
36) Caltran Company has just completed manufacturing job number 445. It included $320 of direct materials cost,
$1,240 of direct labor cost, and $560 of allocated overhead. Please provide the journal entry needed at the time the
job is completed.
Finished goods inventory
37) Altina Company just finished job A40. It included $400 of direct materials, and $3,600 of direct labor. Altina
uses a predetermined manufacturing overhead rate based on a percentage of direct labor costs. That rate is 40%.
Please provide the journal entry needed to record the completion of the job.
Finished goods inventory
38) At the end of the year, Deltona Company has a preliminary debit balance in the Manufacturing overhead account
of $3,950. Please provide the year-end adjusting entry needed to clear the balance to zero.
Cost of goods sold
39) At the end of the year, Martin Company has a preliminary credit balance in the Manufacturing overhead account
of $95. Please provide the year-end adjusting entry needed to clear the balance to zero.
Manufacturing overhead
40) On June 30, Coraline Company finished job number 750, with total job costs of $4,600, and transferred the costs
to Finished goods. On July 6, they completed the sale of the goods to a customer for $5,100 cash. In order to record
the sale, two entries are necessary-one to record revenue, and one to record cost of goods sold. Please provide the
first of two entries to record sales revenue.
Cash
41) On June 30, Coraline Company finished job number 750, with total job costs of $4,600, and transferred the costs
to Finished goods. On July 6, they completed the sale of the goods to a customer for $5,100 cash. In order to
record the sale, two entries are necessary-one to record revenue, and one to record cost of goods sold. Please provide
the second of two entries to record cost of goods sold.
Cost of goods sold
42) At the beginning of 2012, Conway Manufacturing Company had the following account balances:
During the year, the following transactions took place:
Direct materials placed in production: $80,000
Direct labor incurred: $190,000
Manufacturing overhead incurred $300,000
Manufacturing overhead allocated to production: $295,000
Jobs completed with cost of: $500,000
Please record these transactions to the T-accounts and calculate preliminary balances in the Work in process,
Finished goods and Manufacturing overhead accounts, using the format below:
43) At the beginning of 2012, Conway Manufacturing Company had the following account balances:
During the year, the following transactions took place:
Direct materials placed in production: $80,000
Direct labor incurred: $190,000
Manufacturing overhead incurred $300,000
Manufacturing overhead allocated to production: $295,000
Jobs completed with cost of: $500,000
Jobs sold for total revenue of: $750,000
Jobs sold with cost of: $440,000
Remaining balance of Manufacturing overhead cleared to zero.
Please record these transactions to the T-accounts and calculate ending balances in each of the accounts using the
format below:
Learning Objective 17-5
1) Darrius Travel Services provided the following information:
Cost allocation rate for direct labor: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
If Darrius receives $700 for a job requiring 12 hours of direct labor, they will make a profit of $44.
2) Darrius Travel Services provided the following information:
Cost allocation rate for direct labor: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
If Darrius receives $350 for a job requiring 5 hours of direct labor, they will make a profit of $40.
3) Darrius Travel Services provided the following information:
Cost allocation rate for direct labor: $40 per hour
Cost allocation rate for indirect costs: $22 per hour
Darrius is negotiating a job with a new client. The job will require 10 hours of direct labor. If Darrius wishes to
make at least 15% gross profit on the deal, they need to receive $713 of revenues.
4) Job order costing is used primarily in the manufacturing and industrial sectors, but is not well suited for the
service industry.
5) When job order costing is used in the service industry, the allocation of indirect costs is normally based on direct
labor hours.
6) In the service industry, the use of job order costing is made much more effective if a company uses computerized
time records.
7) When job order costing is used in a service business, the allocation of direct labor costs is normally based on
direct labor hours, and the allocation of indirect costs is normally based on the indirect labor hours.
8) In a service business that uses a job order costing system, the professional staff would normally keep precise
records of time spent on each client. It is equally important that the clerical staff and other indirect labor personnel
keep similar records of time spent on each client.
9) The engineering firm of Dobbs and Smith uses a job order costing system to accumulate client-related costs. The
overhead rate is 60% of direct labor cost. Staff engineer time is charged at a rate of $80 per hour. A recent job for a
client involved 30 staff labor hours. How much was the total job cost?
A) $1,600
B) $2,400
C) $3,840
D) $360
10) Abba Accounting expects its accountants to work a total of 24,000 direct labor hours per year. Abba’s estimated
total indirect costs are $240,000. What is the indirect cost allocation rate?
A) $10 per hour
B) $20 per hour
C) $100 per hour
D) $120 per hour
11) Abba Accounting expects its accountants to work a total of 24,000 direct labor hours per year. Abba’s estimated
total indirect costs are $240,000. The direct labor rate is $75 per hour. If Abba does a job requiring 40 hours of
direct labor, what is the total job cost?
A) $7,000
B) $400
C) $3,400
D) $3,000
12) Abba Accounting expects its accountants to work a total of 24,000 direct labor hours per year. Abba’s estimated
total indirect costs are $240,000. The direct labor rate is $75 per hour. If Abba does a job requiring 40 hours of
direct labor, and bills the client using a standard markup of 40%, what will be the amount that Abba bills the client
for?
A) $3,700
B) $4,200
C) $3,400
D) $4,760
13) Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. They
have 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the
professional staff runs about $576,000 per year, and they normally have about 8,000 billable hours per year.
Professional staff keep detailed timesheets distributed by client number. Office and administrative costs total
$754,000 a year. What is the cost allocation rate that Bilkins will use for direct labor i.e. the cost of the
professional staff?
A) $75 per hour
B) $36 per hour
C) $72 per hour
D) $76 per hour
14) Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. They
have 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the
professional staff runs about $576,000 per year, and they normally have about 8,000 billable hours per year.
Professional staff keep detailed time sheets distributed by client number. Office and administrative costs total
$754,000 a year. What is the cost allocation rate that Bilkins will use for office and administrative costs?
A) $94.25 per hour
B) $36.00 per hour
C) $72.00 per hour
D) $74.13 per hour
15) Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. They
have 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the
professional staff runs about $576,000 per year, and they normally have about 8,000 billable hours per year.
Professional staff keep detailed time sheets distributed by client number. Office and administrative costs total
$754,000 a year.
Bilkins allocates professional time and administrative costs to clients monthly, using allocation rates based on
billable hours. During July, Bilkins’ professionals spent 36 hours on their client, Soupy Sales. What is the total
amount of cost that Bilkins will record for the client for the month?
A) $3,393
B) $2,592
C) $5,040
D) $5,985
16) Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. They
have 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the
professional staff runs about $576,000 per year, and they normally have about 8,000 billable hours per year.
Professional staff keep detailed time sheets distributed by client number. Office and administrative costs total
$754,000 a year.
Bilkins allocates professional time and administrative costs to clients monthly, using allocation rates based on
billable hours. During July, Bilkins’ professionals spent 36 hours on their client, Soupy Sales. Bilkins adds a 25%
markup on their costs to calculate amount billed to the customer. How much did Bilkins bill their customer Soupy
Sales for the month of July?
A) $6,633.00
B) $6,833.25
C) $7,481.25
D) $5,985.00
17) Bilkins Financial Advisors provides accounting and finance assistance to customers in the retail business. They
have 4 professionals on staff, plus an office with 6 clerical staff. Total compensation, including benefits, for the
professional staff runs about $576,000 per year, and they normally have about 8,000 billable hours per year.
Professional staff keep detailed time sheets distributed by client number. Office and administrative costs total
$754,000 a year.
Bilkins allocates professional time and administrative costs to clients monthly, using allocation rates based on
billable hours. During July, Bilkins’ professionals spent 36 hours on their client, Soupy Sales. Bilkins adds a 25%
markup on their costs to calculate amount billed to the customer. How much gross profit did Bilkins earn from
Soupy Sales in July?
A) $1,698.25
B) $648.00
C) $1,870.31
D) $1,496.25
18) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and
ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012,
Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of
7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
What rate would Fogelin use for the cost of its specialists?
A) $94 per hour
B) $150 per hour
C) $68 per hour
D) $56 per hour
19) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and
ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012,
Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of
7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
What rate would Fogelin use for the cost of its office and administrative staff?
A) $94 per hour
B) $150 per hour
C) $68 per hour
D) $56 per hour
20) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and
ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012,
Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of
7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
In June, Fogelin signed a contract for a Russian ballet performance. They estimated it would require 34 hours of
specialist time. What is the total cost estimate for this contract?
A) $1,904
B) $5,100
C) $3,196
D) $4,906
21) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and
ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012,
Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of
7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
In June, Fogelin signed a contract for a Russian ballet performance. They negotiated a price of $6,400 for their
services. When the job was complete, Fogelin’s records showed that they had logged 36.5 billable hours. What was
the actual total cost of the job for Fogelin?
A) $5,475
B) $2,044
C) $3,431
D) $4,906
22) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and
ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012,
Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of
7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
In June, Fogelin signed a contract for a Russian ballet performance. They negotiated a price of $6,400 for their
services. When the job was complete, Fogelin’s records showed that they had logged 36.5 billable hours. What was
the amount of gross profit that Fogelin made on the job?
A) $1,494
B) $2,969
C) $925
D) $4,356
23) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and
ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012,
Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of
7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
A new client is contracting with Fogelin to promote a ballet tour in the U.S. Fogelin estimates that the job will
require 40 billable hours of specialist time. If Fogelin wishes to make a 25% gross profit on the job, what price
should Fogelin quote to the client?
A) $2,800
B) $6,000
C) $7,500
D) $4,700
Learning Objective 17-6
1) In a process costing system, each department has its own Work in process account.
2) In a process costing system, conversion costs are normally assumed to be incurred evenly throughout the
production process.
3) In a process costing system, direct materials costs are normally assumed to be incurred evenly throughout the
production process.
4) In a process costing system, equivalent units must be calculated separately for materials and conversion costs.
5) If there are 500 units in Department 1 Work in process account at the end of the month, and they are 80%
complete with respect to conversion costs, they would be accounted for as 400 equivalent units with respect to
conversion costs.