19–21
64. A source document that production managers use to request materials for production and
that is used to assign materials costs to specific jobs or to overhead is a:
A. Job cost sheet.
B. Production order.
C. Materials requisition.
D. Materials purchase order.
E. Receiving report.
65. A company that uses a job order cost accounting system would make the following entry
to record the flow of direct materials into production:
A. debit Goods in Process Inventory, credit Cost of Goods Sold.
B. debit Goods in Process Inventory, credit Raw Materials Inventory.
C. debit Goods in Process Inventory, credit Factory Overhead.
D. debit Factory Overhead, credit Raw Materials Inventory.
E. debit Finished Goods Inventory, credit Raw Materials Inventory.
66. The Goods in Process Inventory account for AB Manufacturing follows. Compute the cost
of jobs completed and transferred to Finished Goods Inventory.
Goods in Process Inventory
Beginning balance 4,500
Direct materials 47,100
Direct labor 29,600 ? Finished goods
Applied overhead 15,800
Ending balance 8,900
The cost of units transferred to finished goods is:
A. $ 97,000.
B. $105,900.
C. $ 88,100.
D. $ 95,200.
E. $ 92,500
67. A company’s overhead rate is 60% of direct labor cost. Using the following incomplete
accounts, determine the cost of direct materials used.
Goods in Process InventoryFinished Goods Inventory
Beg. Bal. 100,800 Beg. Bal. 118,200
D.M. ? 324,800 301,000
D.L. ?
O.H. ?F. G. ?
End. Bal. 131,040 End. Bal. 142,000
Factory Overhead
93,240 90,720
A. $106,400.
B. $113,120.
C. $ 30,240.
D. $211,680.
E. $324,800.
68. A source document that an employee uses to record the number of hours at work and that
is used to determine the total labor cost for each pay period is a:
A. Job cost sheet.
B. Hours-of-production sheet.
C. Time ticket.
D. Job order ticket.
E. Clock card.
69. A source document that an employee uses to report how much time was spent working on
a job or on overhead activities and that is used to determine the amount of direct labor to
charge to the job or to determine the amount of indirect labor to charge to factory overhead is
called a:
A. Payroll Register.
B. Factory payroll record.
C. General Ledger.
D. Time ticket.
E. Factory Overhead Ledger.
70. When factory payroll costs for labor are allocated in a job cost accounting system:
A. Factory Payroll is debited and Goods in Process Inventory is credited.
B. Goods in Process Inventory and Factory Overhead are debited and Factory Payroll is
credited.
C. Cost of Goods Manufactured is debited and Direct Labor is credited.
D. Direct Labor and Indirect Labor are debited and Factory Payroll is credited.
E. Goods in Process Inventory is debited and Factory Payroll is credited.
71. Penn Company uses a job order cost accounting system. In the last month, the system
accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor.
These costs were accumulated in Factory Payroll as they were paid. Which entry should Penn
make to assign the Factory Payroll?
A. Debit Payroll Expense $28,900; credit Cash $28,900.
B. Debit Payroll Expense $24,600; debit Factory Overhead $4,300; credit Factory Payroll
$28,900.
C. Debit Goods in Process Inventory $24,600; debit Factory Overhead $4,300; credit Factory
Payroll $28,900.
D. Debit Goods in Process Inventory $24,600; debit Factory Overhead $4,300; credit Wages
Payable $28,900.
E. Debit Goods in Process Inventory $28,900; credit Factory Payroll $28,900.
72. Labor costs in production can be:
A. Direct or indirect.
B. Indirect or sunk.
C. Direct or payroll.
D. Indirect or payroll.
E. Direct or sunk.
73. A company has an overhead application rate of 125% of direct labor costs. How much
overhead would be allocated to a job if it required total labor costing $20,000?
A. $ 5,000.
B. $ 16,000.
C. $ 25,000.
D. $125,000.
E. $250,000.
74. The rate established prior to the beginning of a period that uses estimated overhead and an
allocation factor such as estimated direct labor, and that is used to assign overhead cost to
jobs, is the:
A. Predetermined overhead allocation rate.
B. Overhead variance rate.
C. Estimated labor cost rate.
D. Chargeable overhead rate.
E. Miscellaneous overhead rate.
75. Canoe Company uses a job order cost accounting system and allocates its overhead on the
basis of direct labor costs. Canoe Company’s production costs for the year were: direct labor,
$30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead
application rate was:
A. 5.0%.
B. 12.0%.
C. 20.0%.
D. 500.0%.
E. 16.7%.
76. Alton Company has an overhead application rate of 160% and allocates overhead based
on direct materials. During the current period, direct labor is $50,000 and direct materials
used are $80,000. Determine the amount of overhead Alton Company should record in the
current period.
A. $ 31,250
B. $ 50,000
C. $ 80,000.
D. $ 128,000.
E. $ 208,000.
77. The overhead cost applied to a job during a period is recorded with a credit to Factory
Overhead and a debit to:
A. Jobs Overhead Expense.
B. Cost of Goods Sold.
C. Finished Goods Inventory.
D. Indirect Labor.
E. Goods in Process Inventory.
78. BVD Company uses a job order cost accounting system and last period incurred $80,000
of overhead and $100,000 of direct labor. BVD estimates that its overhead next period will be
$75,000. It also expects to incur $100,000 of direct labor. If BVD bases applied overhead on
direct labor cost, their overhead application rate for the next period should be:
A. 75%.
B. 80%.
C. 107%.
D. 125%.
E. 133%.
79. O.K. Company uses a job order cost accounting system and allocates its overhead on the
basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period,
and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company’s
overhead application rate?
A. 6.25%.
B. 62.5%.
C. 160%.
D. 1600%.
E. 67%.
80. The R&R Company’s production costs for August are: direct labor, $13,000; indirect
labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat,
lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company’s
factory overhead incurred for August is:
A. $ 2,000.
B. $ 6,500.
C. $ 8,500.
D. $21,500.
E. $36,500.
81. Deltan Corp. allocates overhead to production on the basis of direct labor costs. Deltan’s
total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the
amount of overhead to be allocated to finished goods inventory if there is $20,000 of total
direct labor cost in the jobs in the finished goods inventory.
A. $ 8,000.
B. $20,000.
C. $70,000.
D. $50,000.
E. $90,000.
82. Austin Company uses a job order cost accounting system. The company’s executives
estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory
overhead would be $1,500,000 for the current period. At the end of the period, the records
show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead
costs. Using direct labor hours as a base, what was the predetermined overhead allocation
rate?
A. $6.00 per direct labor hour.
B. $7.50 per direct labor hour.
C. $6.67 per direct labor hour.
D. $8.33 per direct labor hour.
E. $7.08 per direct labor hour.
83. Using the following accounts and an overhead rate of 90% of direct labor cost, determine
the amount of applied overhead.
Goods in Process Inventory Finished Goods Inventory
Beg. Bal. 17,600 Beg. Bal. 5,200
D.M. 52,800 201,520
D.L. ?
O.H. ? F. G. ?
End. Bal. 36,080
A. $ 79,200.
B. $167,200.
C. $ 34,320.
D. $ 88,000.
E. $ 35,376.
84. If one unit of Product X used $2.50 of direct materials and $3.00 of direct labor, sold for
$8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross
profit was realized from this sale?
A. $8.00.
B. $5.50.
C. $2.50.
D. $1.60.
E. $0.90.
85. The ending inventory of finished goods has a total cost of $9,000 and consists of 600
units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct
labor, how much direct materials cost was incurred in producing these units?
A. $3,750.
B. $2,000.
C. $4,000.
D. $6,000.
E. $9,000.
86. At the current year-end, Hardly Company found that its overhead was underapplied by
$2,500, and this amount was not deemed to be a material amount. Based on this information,
Hardly should
A. Close the $2,500 to Cost of Goods Sold.
B. Close the $2,500 to Finished Goods Inventory.
C. Do nothing about the $2,500, since it is not material, and it is likely that overhead will be
overapplied by the same amount next year.
D. Carry the $2,500 to the income statement as “Other Expense”
E. Carry the $2,500 to the next period.
87. If overhead applied is less than actual overhead incurred, it is:
A. Fully applied.
B. Underapplied.
C. Overapplied.
D. Expected.
E. Normal.
88. The amount by which the overhead applied to jobs during a period exceeds the overhead
incurred during the period is known as:
A. Adjusted overhead.
B. Estimated overhead.
C. Predetermined overhead.
D. Underapplied overhead.
E. Overapplied overhead.
89. The amount by which overhead incurred during a period exceeds the overhead applied to
jobs is:
A. Balanced overhead.
B. Predetermined overhead.
C. Actual overhead.
D. Underapplied overhead.
E. Overapplied overhead.
90. If a company applies overhead to production with a predetermined rate, a credit balance in
the Factory Overhead account at the end of the period means that:
A. The bookkeeper has made an error because the debits don’t equal the credits.
B. The balance will be carried forward to the next period as an overhead cost.
C. Actual overhead incurred was less than the overhead amount charged to production.
D. The overhead was underapplied for the period.
E. Actual overhead was greater than the overhead amount charged to production.
91. M.A.E. charged the following amounts of overhead to jobs during the year: $20,000 to
jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished
and sold. At year-end, M.A.E. Company’s Factory Overhead account has a credit balance of
$5,000, which is not a material amount. What entry should M.A.E. make at year-end?
A. No entry is needed.
B. Debit Factory Overhead $5,000; credit Cost of Goods Sold $5,000.
C. Debit Cost of Goods Sold $5,000; credit Factory Overhead $5,000.
D. Debit Factory Overhead $5,000; credit Goods in Process Inventory $5,000.
E. Debit Factory Overhead $5,000; credit Finished Goods Inventory $5,000.
92. Estimated overhead and direct labor costs for the year were $112,500 and $125,000,
respectively. During the year, actual overhead was $107,400 and actual direct labor cost was
$120,000. The entry to close the over- or underapplied overhead at year-end, assuming an
immaterial amount, would include:
A. A debit to Cost of Goods Sold for $600.
B. A credit to Factory Overhead for $600.
C. A credit to Finished Goods Inventory for $600.
D. A debit to Goods in Process Inventory for $600.
E. A credit to Cost of Goods Sold for $600.
93. If it is a material amount, overapplied or underapplied overhead should be disposed of by
allocating it to:
A. Cost of goods sold and finished goods inventory.
B. Finished goods inventory and goods in process inventory.
C. Goods in process inventory, finished goods inventory, and cost of goods sold.
D. Goods in process inventory.
E. Raw materials inventory, goods in process inventory, and finished goods inventory.
94. The Dina Corp. has applied overhead to jobs during the period as follows:
Jobs finished and sold ……………… $ 46,000
Jobs started and in process …………. 54,000
Jobs finished and unsold …………… 100,000
The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead
account, and this amount is not material. The entry to dispose of this remaining factory
overhead balance is:
A. Debit Cost of Goods Sold $5,600; credit Factory Overhead $5,600.
B. Debit Factory Overhead $5,600; credit Cost of Goods Sold $5,600.
C. Debit Factory Overhead $5,600; credit Goods in Process Inventory $5,600.
D. Debit Goods in Process Inventory $5,600; credit Factory Overhead $5,600.
E. No entry is needed.
95. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. The journal entry to record the purchase of materials is:
A. Debit Raw Materials Inventory $198,000; credit Accounts Payable $198,000.
B. Debit Goods in Process Inventory $198,000; credit Accounts Payable $198,000.
C. Debit Raw Materials Inventory $198,000; credit Goods in Process Inventory $198,000.
D. Debit Goods in Process Inventory $195,000; credit Raw Materials Inventory $195,000.
E. Debit Raw Materials Inventory $198,000; credit Finished Goods Inventory $198,000.
96. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. The journal entry to record the issuance of materials to
production is:
A. Debit Raw Materials Inventory $195,000; credit Accounts Payable $195,000.
B. Debit Goods in Process Inventory $195,000; credit Raw Materials Inventory $195,000.
C. Debit Raw Materials Inventory $195,000; credit Goods in Process Inventory $195,000.
D. Debit Goods in Process Inventory $165,000; debit Factory Overhead $30,000; credit Raw
Materials Inventory $195,000.
E. Debit Finished Goods Inventory $195,000; credit Raw Materials Inventory $195,000.
97. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. The journal entry to record payment of the factory payroll
is:
A. Debit Goods in Process Inventory $150,000; credit Factory Payroll $150,000.
B. Debit Goods in Process Inventory $150,000; credit Cash $150,000.
C. Debit Factory Payroll $150,000; credit Cash $150,000.
D. Debit Goods in Process Inventory $110,000; debit Factory Overhead $40,000; credit
Factory Payroll $150,000.
E. Debit Goods in Process Inventory $110,000; debit Factory Overhead $40,000; credit Cash
$150,000.
98. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. The journal entry to record the allocation of the factory
payroll to production is:
A. Debit Goods in Process Inventory $150,000; credit Factory Payroll $150,000.
B. Debit Goods in Process Inventory $150,000; credit Cash $150,000.
C. Debit Factory Payroll $150,000; credit Cash $150,000.
D. Debit Goods in Process Inventory $110,000; debit Factory Overhead $40,000; credit
Factory Payroll $150,000.
E. Debit Goods in Process Inventory $110,000; debit Factory Overhead $40,000; credit Cash
$150,000.
99. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. The journal entry to record the application of factory
overhead to production is:
A. Debit Goods in Process Inventory $225,000; credit Factory Overhead $225,000.
B. Debit Goods in Process Inventory $165,000; credit Factory Overhead $165,000.
C. Debit Factory Payroll $150,000; credit Goods in Process Inventory $150,000.
D. Debit Factory Overhead $165,000; credit Goods in Process Inventory $165,000.
E. Debit Goods in Process Inventory $165,000; credit Factory Payroll $165,000.
100. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. The total manufacturing costs added during the period are:
A. $440,000.
B. $470,000.
C. $500,000.
D. $570,000.
E. $540,000.
101. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. If Bard incurred total overhead costs of $167,800 during the
month, compute the amount of under- or overapplied overhead:
A. $2,800 overapplied.
B. $17,800 underapplied.
C. $2,800 underapplied.
D. $17,800 overapplied.
E. $57,200 overapplied.
102. Bard Manufacturing uses a job order cost accounting system. During one month Bard
purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of
which $30,000 were indirect. Bard incurred a factory payroll of $150,000, paid in cash, of
which $40,000 is classified as indirect labor. Bard uses a predetermined overhead application
rate of 150% of direct labor cost. Bard’s beginning and ending Goods in Process Inventory
are $15,500 and $27,000 respectively. Compute the cost of product transferred to Finished
Goods Inventory:
A. $558,500.
B. $440,000.
C. $413,000.
D. $428,500.
E. $415,000.
103. Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and
the overhead rate is 120% of direct labor, how much direct materials cost was incurred in
producing the inventory?
A. $31,600.
B. $58,000.
C. $56,000.
D. $60,000.
E. $86,400.
104. Hancock Manufacturing allocates overhead to production on the basis of direct labor
costs. At the beginning of the year, Hancock estimated total overhead of $396,000; materials
of $410,000 and direct labor of $220,000. During the year Hancock incurred $418,000 in
materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the
overhead application rate.
A. 180%.
B. 55.6%.
C. 186%.
D. 184%.
E. 96.6%.