114)
Kayak Company uses a job order costing system and allocates its overhead on the basis of direct
labor costs. Kayak 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) 16.7%. B) 500.0%. C) 5.0%. D) 12.0%. E) 20.0%.
115)
The overhead cost applied to a job during a period is recorded with a credit to Factory Overhead
and a debit to:
A)
Cost of Goods Sold.
B)
Finished Goods Inventory.
C)
Work in Process Inventory.
D)
Indirect Labor.
E)
Jobs Overhead Expense.
116)
CWN Company uses a job order costing system and last period incurred $80,000 of actual
overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be
$75,000. It also expects to incur $100,000 of direct labor. If CWN bases applied overhead on direct
labor cost, its predetermined overhead rate for the next period should be:
A) 107%. B) 80%. C) 133%. D) 75%. E) 125%.
117)
Cosi Company uses a job order costing system and allocates its overhead on the basis of direct
labor costs. Cosi 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 Cosi Company’s overhead application
rate?
A) 1600%. B) 62.5%. C) 67%. D) 6.25%. E) 160%.
118)
The B&T Company’s production costs for May are: direct labor, $13,000; indirect labor, $6,500;
direct materials, $15,000; property taxes on production facility, $800; factory heat, lights and
power, $1,000; and insurance on plant and equipment, $200. B&T Company’s factory overhead
incurred for May is:
A) $36,500. B) $8,500. C) $6,500. D) $2,000. E) $21,500.
119)
Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa’s total
estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of
overhead applied to a job which used $20,000 of direct labor.
A) $8,000. B) $90,000. C) $20,000. D) $70,000. E) $50,000.
66
120)
Dallas Company uses a job order costing 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 rate?
A)
$6.00 per direct labor hour.
B)
$7.08 per direct labor hour.
C)
$7.50 per direct labor hour.
D)
$6.67 per direct labor hour.
E)
$8.33 per direct labor hour.
121)
Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount
of applied overhead.
Work in Process Inventory
Beginning WIP 17,60
0
Direct Materials 52,80
0
Direct Labor ?
Applied Overhead ?
To Finished Goods ?
Ending WIP 36,08
0
Finished Goods Inventory
Beginning FG 5,200
201,52
0
Ending FG
A) $88,000. B) $79,200. C) $167,200. D) $35,376. E) $34,320.
122)
If one unit of Product Z2 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) $0.90. B) $5.50. C) $2.50. D) $1.60. E) $8.00.
123)
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) $2,000. B) $3,750. C) $6,000. D) $4,000. E) $9,000.
124)
At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and
this amount was not considered material. Based on this information, Simply should:
A)
Close the $2,500 to Finished Goods Inventory.
B)
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.
C)
Carry the $2,500 to the income statement as “Other Expense”.
D)
Carry the $2,500 to the next period.
E)
Close the $2,500 to Cost of Goods Sold.
125)
If overhead applied is less than actual overhead incurred, it is:
A)
Underapplied.
B)
Expected.
C)
Overapplied.
D)
Normal.
E)
Fully applied.
126)
The amount by which the overhead applied to jobs during a period exceeds the overhead incurred
during the period is known as:
A)
Predetermined overhead.
B)
Overapplied overhead.
C)
Adjusted overhead.
D)
Underapplied overhead.
E)
Estimated overhead.
127)
The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:
A)
Underapplied overhead.
B)
Actual overhead.
C)
Predetermined overhead.
D)
Overapplied overhead.
E)
Balanced overhead.
128)
If a company applies overhead to production with a predetermined overhead rate, a credit balance
in the Factory Overhead account at the end of the period means that:
A)
The overhead was underapplied for the period.
B)
Actual overhead was greater than the overhead amount applied to production.
C)
The bookkeeper has made an error because the debits don’t equal the credits.
D)
The balance will be carried forward to the next period as an overhead cost.
E)
Actual overhead incurred was less than the overhead amount applied to production.
129)
Marshall Enterprises 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, Marshall Enterprise’s Factory Overhead account has a credit balance of $5,000,
which is not a material amount. What entry should Marshall make at year-end?
A)
Debit Cost of Goods Sold $5,000; credit Factory Overhead $5,000.
B)
Debit Factory Overhead $5,000; credit Cost of Goods Sold $5,000.
C)
No entry is needed.
D)
Debit Factory Overhead $5,000; credit Finished Goods Inventory $5,000.
E)
Debit Factory Overhead $5,000; credit Work in Process Inventory $5,000.
130)
Morris Company applies overhead based on direct labor costs. For the current year, Morris
Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000.
Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled
$1,800,000. At year-end, the balance in the Factory Overhead account is a:
A)
$380,000 Debit balance.
B)
$360,000 Debit balance.
C)
$20,000 Debit balance.
D)
$20,000 Credit balance.
E)
$400,000 Credit balance.
131)
Morris Company applies overhead based on direct labor costs. For the current year, Morris
Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000.
Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled
$1,800,000. At year-end, Factory Overhead is:
A)
Underapplied by $20,000.
B)
Overapplied by $40,000.
C)
Overapplied by $20,000.
D)
Overapplied by $190,000.
E)
Neither overapplied nor underapplied.
