153)
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the
beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and
direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in
overhead costs and $224,000 in direct labor costs. Compute the amount of overhead applied to jobs
during the year.
A) $403,200. B) $413,200. C) $424,450. D) $413,190. E) $396,000.
154)
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the
beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and
direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in
overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied
overhead for the year.
A)
$17,200 underapplied.
B)
$4,800 underapplied.
C)
$10,000 underapplied.
D)
$10,000 overapplied.
E)
$17,200 overapplied.
155)
Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount
of applied overhead.
Work in Process Inventory
Beginning WIP 35,20
0
Direct materials 55,30
0
Direct labor ?
Factory Overhead ?
To Finished Goods 102 203,30
To Finished Goods 203,30
0
Ending WIP 25,20
0
Finished Goods Inventory
Beginning FG 5,200
Cost of Goods Mfg’d 203,30
0
A) $90,500. B) $78,000. C) $60,000. D) $71,890. E) $138,000.
156)
Portside Watercraft uses a job order costing system. During one month Portside purchased
$173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000
were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor.
Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to
record the issuance of materials to production is:
A)
Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.
B)
Debit Work in Process Inventory $140,000; debit Raw Materials Inventory $24,000; credit
Materials Inventory $164,000.
C)
Debit Finished Goods Inventory $140,000; credit Raw Materials Inventory $140,000.
D)
Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw
Materials Inventory $164,000.
E)
Debit Raw Materials Inventory $153,000; credit Accounts Payable $153,000.
157)
Portside Watercraft uses a job order costing system. During one month Portside purchased
$173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000
were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor.
Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to
record the allocation of factory wages to production is:
A)
Debit Factory Wages Payable $95,000; credit Cash $95,000.
B)
Debit Work in Process Inventory $95,000; credit Cash $95,000.
C)
Debit Work in Process Inventory $95,000; credit Factory Wages Payable $95,000.
D)
Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Cash
$95,000.
E)
Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Factory
Wages Payable $95,000.
158)
Portside Watercraft uses a job order costing system. During one month Portside purchased
$153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000
were indirect. Portside incurred a factory payroll of $95,000, of which $25,000 was indirect labor.
Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to
record the application of factory overhead to production is:
A)
Debit Work in Process Inventory $161,500; credit Factory Overhead $161,500.
B)
Debit Work in Process Inventory $95,000; credit Factory Payroll $95,000.
C)
Debit Work in Process Inventory $119,000; credit Factory Overhead $119,000.
D)
Debit Factory Overhead $119,000; credit Work in Process Inventory $119,000.
E)
Debit Work in Process Inventory $55,800; credit Factory Overhead $55,800.
159)
Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and
allocates $18 of overhead for each employee hour worked. Materials are assigned to each job
according to actual cost. If Job M-47 used $350 of materials and took 20 hours of labor to
complete, what is the total cost that should be assigned to the job?
A) $710 B) $600 C) $950 D) $590 E) $380
108
160)
Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and
allocates $18 of overhead for each employee hour worked. Materials are assigned to each job
according to actual cost. Jobs are marked up 20% above cost to determine the selling price. If Job
M-47 used $350 of materials and took 20 hours of labor to complete, what is the selling price of
the job?
A) $456 B) $708 C) $1,140 D) $720 E) $852
SHORT ANSWER QUESTIONS
161)
Match the following terms to the appropriate definition.
A. Cost accounting system
B. Time ticket
C. Finished Goods Inventory
D. Materials requisition
E. Underapplied overhead
F. Work in Process Inventory
G. Overapplied overhead
H. Job cost sheet
I. Job order costing system
J. Predetermined overhead rate
K. Materials ledger card
________ 1. The production of products in response to special orders; also called customized
production.
________ 2. Records manufacturing activities using a perpetual inventory system.
________ 3. The amount by which the overhead applied to jobs in a period with the predetermined
overhead rate exceeds the actual overhead incurred in a period.
________ 4. An asset account where costs are accumulated while jobs are being produced.
5. The rate established prior to the beginning of a period that relates estimated overhead to
an allocation factor such as estimated direct labor and is used to assign overhead cost to a job.
_ 6. An asset account where costs of completed jobs reside until the jobs are delivered to
customers.
________ 7. A source document that production managers use to request materials needed for
manufacturing and that is used to assign materials costs to specific jobs or to overhead.
8. A perpetual record that is updated each time units of raw material are purchased and
issued for use in production.
________ 9. A source document that is used to report how much time an employee spent working on
a job or on overhead activities and the labor costs to assign to jobs or overhead.
_______10. The amount by which actual overhead incurred in a period exceeds the overhead
applied to jobs with the predetermined overhead rate.
11. A separate record maintained for each job in a job order costing system; it shows the
costs of direct materials, direct labor, and overhead for each job.
ESSAY QUESTIONS
162)
What is a cost accounting system? What are the two basic types of cost accounting systems?
163)
Describe the purpose of a job cost sheet, and explain what information is found on the job cost
sheet.
164)
Explain how a service firm, such as an advertising agency, might use job order costing.
165)
Describe how materials flow through a job order costing system, and identify the key documents in
the system.
166)
Describe the flow of the raw materials, both direct and indirect, through the inventory accounts
from purchase to use.
167)
Describe the flow of labor costs in a job order costing system, and identify the documents used in
the system.
168)
Describe the flow of the employee labor, both direct and indirect, through the inventory accounts.
169)
Explain what a predetermined overhead rate is, how it is calculated, and why it is used.
170)
Explain why the Factory Overhead account for a company may have a difference between the
amount debited and the amount credited, resulting in an end of period balance prior to adjustment.
171)
Briefly describe how manufacturing firms dispose of overapplied or underapplied factory overhead.
172)
The Merker Manufacturing Company has the following job cost sheets on file. They represent jobs
that have been worked on during April of the current year. This table summarizes information
provided on each sheet:
Number
Total Cost Incurred
Status of Job
544
$15,050
Finished and
delivered
545
$22,400
Finished and
delivered
546
$ 7,500
Finishe
1
d
12
and unsold
544
$15,050
Finished and delivered
545
$22,400
Finished and delivered
547
Finished and delivered
551
22,200
Finished and delivered
548
Unfinished
550
$14,600
Unfinished
553
1,000
Unfinished
546
Finished and unsold
549
Finished and unsold
552
Finished and unsold
546
$ 7,500
Finished and unsold
547
$ 4,300
Finished and
delivered
548
$33,000
Unfinished
549
$62,000
Finished and unsold
550
$14,600
Unfinished
551
$22,200
Finished and
delivered
552
$ 3,600
Finished and unsold
553
$ 1,000
Unfinished
(a) What is the cost of goods sold for the month of April?
(b) What is the cost of the Work in Process inventory on April 30?
(c) What is the cost of the finished goods inventory on April 30?
Number
Total Cost Incurred
Status of Job
951
$ 4,200
Finished and delivered
Number
Total Cost Incurred
Status of Job
Total
$73,810
Number
Total Cost Incurred
Status of Job
953
$ 9,300
Finished and unsold
955
Finished and unsold
173)
The Luna Manufacturing Company has the following job cost sheets on file. They represent jobs
that have been worked on during September of the current year. This table summarizes information
provided on each sheet:
Number
Total Cost Incurred
Status of Job
951
$ 4,200
Finished and delivered
952
$ 7,700
Unfinished
953
$ 9,300
Finished and unsold
954
$11,100
Finished and delivered
955
$ 3,000
Finished and unsold
956
$ 5,500
Finished and delivered
957
$35,000
Unfinished
958
$ 3,200
Finished and delivered
959
$ 500
Unfinished
960
$22,110
Unfinished
961
$ 7,200
Finished and delivered
962
$ 8,500
Unfinished
963
$11,200
Finished and unsold
(a) What is the cost of the Work in Process inventory on September 30?
(b) What is the cost of the finished goods inventory on September 30?
(c) What is the cost of goods sold for the month of September?
115
Finished and delivered
Finished and delivered
Finished and delivered
Finished and delivered
174)
Chung Corporation uses a job order costing system. Five jobs were worked on during the current
year. The predetermined overhead rate is 20% of direct labor costs. The following cost information is
available (all materials and time ticket information applies to direct costs):
Job
Materials Requisitions
Time Tickets
101
$66,000
$32,000
102
$63,000
$74,000
103
$39,000
$50,000
104
$32,000
$36,000
105
$53,000
$68,000
Part 1—Complete the job cost sheets for each job.
Job No. 101
Job No. 102
Job No. 103
Materials
Materials
Materials
Labor
Labor
Labor
Overhead
Overhead
Overhead
Total Cost
Total Cost
Total Cost
Status
In Process
Status
Sold
Status
Finished
Job No. 104
Job No. 105
Materials
Materials
Labor
Labor
Overhead
Overhead
Total Cost
Total Cost
Status
Sold
Status
Finished
Part 2—Identify the amounts of each of the following accounts at the end of the period
a. Work in Process________
116
b. Finished Goods________
c. Cost of Goods Sold________
Materials
$ 66,000
$ 63,000
$ 39,000
Labor
$ 32,000
$ 74,000
$ 50,000
Overhead
$ 6,400
$ 14,800
$ 10,000
Total Cost
$104,400
$151,800
$ 99,000
Status
Sold
Finished
Materials
$32,000
$53,000
Labor
$36,000
$68,000
Total Cost
$75,200
$134,600
Status
Sold
175)
The following data relates to the Mass Company’s first operating period. Calculate the total cost of
goods sold for each product.
Overhead
rate
Cost/unit
Units
(Percent
Direct
Direct
Ending
of Direct
Product
Materials
Labor
Produced Inventory
Labor cost)
A
$10
$12
215115
60%
B
8
15
330180
40%
C
14
10
250200
80%
176)
Southwick Company uses a job order costing system. On November 1, $15,000 of direct materials
and $3,500 of indirect materials were requisitioned for production. Prepare the general journal
entries to record this requisition.
177)
A company that uses a job order costing system incurred $10,000 of factory payroll during May.
Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.
52,700
Factory Overhead …………………
16,800
178)
Time tickets for factory employees during the month of August are summarized as follows:
Job 919…………………………………………
$ 9,800
Job 920…………………………………………
14,650
Job 921…………………………………………
12,250
Job 922…………………………………………
16,000
Total direct labor……………………………….
$52,700
Indirect labor……………………………………
16,800
Total labor cost…………………………………
$69,500
Make the necessary journal entries to record factory payroll for direct and indirect labor.
179)
Chumley Advertising Agency contracted with a company to prepare an ad campaign. Chumley uses
a job order costing system. Chumley estimates that the job will take 140 designer hours at $90 per
hour and 85 staff hours at $45 per hour. Chumley uses two overhead rates in applying overhead to
jobs: Designer-related at $100 per designer hour and staff-related at $50 per staff hour. Determine
the total estimated cost for this job.