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Chapter 17(2): Job Order Costing
159.
National Survey Company uses a job order cost system.
(a)
Indicate the source of the data for debiting Work in Process for each of the following:
(1)
Direct materials requisitioned
(2)
Direct labor used
(b)
Indicate the source of the data for crediting Work in Process for jobs completed.
(c)
Present a list of the three controlling accounts used in the general ledger to record the
inventories and, in each
case, indicate the related subsidiary ledger.
160.
During August, the receipts and distributions of Material No. B4G9 are as follows:
Received
Aug. 3 1,100 units at $15
16 1,700 units at $17
29 900 units at $18
Issued
Aug. 11 700 units for Job No. 116
18 1,900 units for Job No. 117
30 800 units for Job No. 118
(a)
Determine the cost of each of the three issues under a perpetual system, using the first-in,
first-out method.
(b)
Present the journal entry to record the issuance of the materials for the month, assuming that
the cost of
issuances is determined by the first-in, first-out method.
161.
A summary of the time tickets for August follows:
Description
Amount
Description
Amount
Job No. 321
$11,000
Job No. 342
$8,300
Job No. 329
9,200
Job No. 346
5,700
Job No. 336
5,000
Indirect labor
8,000
Present the journal entries to record (a) the labor cost incurred and (b) the application of factory overhead to
production for August. The factory overhead rate is 70% of direct labor cost.
162.
The following account appears in the ledger after only part of the postings have been completed for July, the first
month of the current fiscal year:
Work in Process
Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for
July was $75,000. Jobs completed during the month totaled $301,200.
(a)
Prepare the journal entries to record (1) the application of factory overhead to production
during July and (2)
the jobs completed during July.
(b)
What is the balance of the factory overhead account on July 31?
(c)
Was factory overhead over applied or under applied on July 31?
(d)
Determine the balance of Work in Process on July 31.
July 1 Balance
Direct materials
Direct labor
60,200
147,000
120,000
163.
Present entries to record the following summarized operations related to production for a company using a job order
cost system:
(a)
Materials purchased on account
$176,000
(b)
Prepaid expenses incurred on account
12,200
(c)
Materials requisitioned:
For production orders
153,700
For general factory use
2,700
(d)
Factory labor used:
On production orders
141,300
For general factory purposes
12,000
(e)
Depreciation on factory equipment
37,000
(f)
Expiration of prepaid expenses, chargeable to factory
6,100
(g)
Factory overhead costs incurred on account
76,000
(h)
Factory overhead applied, based on machine hours
105,300
(i)
Jobs finished
415,300
(j)
Jobs shipped to customers: Cost
412,000
Selling price (assume all sold on account)
638,000
Chapter 17(2): Job Order Costing
164.
The balance of Material Q on May 1 and the receipts and issuances during May are as follows:
Balance, May 1 8 at $32
Received, May 11 23 at $33
Received, May 25 15 at $35
Issued, May 17 14
Issued, May 27 18
Determine the cost of each of the issuances under a perpetual system, using the FIFO method.
165.
Prepare the journal entry for materials and labor, based on the following:
Raw materials issued: Job No. 609, $850; for general use in factory, $600
Labor time tickets: Job No. 609, $1,600;
$400 for supervision
166.
Six selected transactions for the current month are indicated by letters in the following T accounts in a job order
cost
accounting system:
Materials Work in Process
(a)
(a) (d)
(b)
(c)
Wages Payable (f)
(b)
Factory Overhead Finished Goods
(a) (c) (d) (e)
(b)
(f) (f)
Cost of Goods Sold
(e)
(f)
Describe each of the six transactions.
167.
On November 2, Newsprint Manufacturing purchases 5 rolls of paper on account at $125 per roll for use within the
production process. On November 5, 4 rolls of this paper are issued to Job 157A in the Printing Department. The
Printing Department records $675 in direct labor and $1,150 of factory overhead to Job 157A. On November 8,
Printing transfers Job 157A to the Folding Department. The Folding Department applies $450 in direct labor and
$655 in factory overhead to Job 157A. Job 157A is transferred to Finished Goods inventory on November 9.
(a)
Journalize the purchase of the paper.
(b)
Journalize the transfer of raw materials to work in process, the application of direct labor,
and the application
of manufacturing overhead to Job 157A while in the Printing
Department.
(c)
Journalize the transfer of Job 157A to the Folding Department at actual cost.
(d)
Journalize the application of direct labor and the application of manufacturing overhead to
Job 157A while in
the Folding Department.
(e)
Journalize the transfer of Job 157A to Finished Goods Inventory at actual cost.
168.
On May 15, the stamping department accepted Job 051507A to make 1,000 funnels. Materials requisitioned was
1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set. The cost driver used by stamping department
is
the drop-forge strokes indicated by a machine mounted counter. Overhead is applied at $2.25 for each drop-forge
stroke. Additionally, $375.00 of overhead is applied to each job due to setup and tear down. Direct labor is applied
at
$22.50 per hour for the machine operator and $11.10 for the machine loader. The job required 6.5 hours of labor.
Upon completion, the job was transferred to Finished Goods Inventory.
Journalize all events as of May 15.
169.
On November 14, the Milling Department accepted Job 111407A for 1,000 pounds of cereal mix.
Materials:
Standard Qty.
Standard Cost
Oats
525 pounds
$1.25 per pound
Wheat
450 pounds
$1.15 per pound
Barley
85 pounds
$1.45 per pound
Malt
65 pounds
$2.15 per pound
Honey
25 quarts
$1.20 per quart
Water
25 gallons
$0.45 per gallon
Time:
Miller
4 1/2 hours
$22.75 per hour
Loader
1 1/2 hours
$11.50 per hour
Overhead is applied at $5.75 per pound completed. The recipe produced 1,025 pounds of cereal mix.
(a)
Record the journal entry to transfer raw materials to Job 111407A.
(b)
Record the journal entry for direct labor incurred for Job 111407A.
(c)
Record the journal entry to apply manufacturing overhead to Job 111407A.
(d)
Record the journal entry to transfer Job 111407A to Finished Goods on November 14.
170.
Put the following in the order of the flow of manufacturing costs for a company.
a.
Closing under/over applied factory overhead to Cost of Goods Sold
b.
Materials purchased
c.
Factory labor used and factory overhead incurred in production
d.
Completed jobs moved to finished goods
e.
Factory overhead applied to jobs according to the predetermined overhead rate
f.
Materials requisitioned to jobs
g.
Selling of finished product
h.
Preparation of financial statements to determine gross profit
171.
At the end of the period, Carson Company had the following balances in selected accounts:
Materials
$ 80,000
Finished goods
190,000
Work in process
70,000
Cost of goods sold
1,000,000
Factory overhead
30,000
Required:
a.
The factory overhead balance is relatively small, prepare the journal entry to close the Factory
Overhead account
assuming a debit balance. What does a debit balance mean?
b.
The factory overhead balance is relatively small, prepare the journal entry to close the Factory
Overhead account
assuming a credit balance. What does a credit balance mean?
172.
The following is a list of costs incurred by several business organizations:
(a)
Telephone cable for a telephone company
(b)
Membership fees for a health club for executives
(c)
Salary of the director of internal auditing
(d)
Long-distance telephone bill for calls made by salespersons
(e)
Carrying cases for a manufacturer of video camcorders
(f)
Cotton for a textile manufacturer of blue jeans
(g)
Bandages for the emergency room of a hospital
(h)
Cost of company holiday party
(i)
Electricity used to operate factory machinery
(j)
State unemployment compensation taxes for factory workers
(k)
Gloves for factory machine operators
(l)
Fees paid for lawn service for office grounds
(m)
Salary of secretary to vice-president of finance
(n)
Salary of secretary to vice-president of marketing
(o)
Production supervisor's salary
(p)
Engine oil for manufacturer and distributor of motorcycles
(q)
Oil lubricants for factory plant and equipment
(r)
Cost of a radio commercial
(s)
Depreciation on factory equipment
(t)
Wages of checkout clerk in company-owned retail outlet
(u)
Maintenance and repair costs for factory equipment
(v)
Depreciation on office equipment
(w)
Bonuses paid to salespersons
(x)
Insurance on factory building
(y)
Training for accounting personnel on use of microcomputer
(z)
Steel for a construction contractor
Classify each of the preceding costs as product costs or period costs. For those costs classified as product costs,
indicate whether the product cost is a direct materials cost, direct labor cost, or factory overhead cost. For those
costs
classified as period costs, indicate whether the period cost is a selling expense or an administrative expense.
Use the
following tabular headings for preparing your answer. Place an X in the appropriate column.
Product Cost
Period Cost
Cost
Direct
Materials
Cost
Direct
Labor
Cost
Factory
Overhead
Cost
Selling
Expense
Administrative
Expense
Chapter 17(2): Job Order Costing
173.
List the accounts used in the cost flow for (a) a manufacturer and (b) a service provider.
174.
Discuss how job order cost information is used in decision making. What are some possible reasons that actual
cost
of materials would exceed expected costs for a job?
175.
Discuss the use of job order costing for professional services businesses. What are the similarities and differences
between service and manufacturing business job order costing?
176.
a system that uses a different overhead rate for each activity
177.
a subsidiary ledger that maintains a separate account for each type of material
178.
applied overhead is more than actual overhead incurred
179.
typically used by companies that make custom products
180.
typically used by companies whose products are indistinguishable from each other
181.
the stock ledger
182.
applied overhead is less than actual overhead incurred
183.
factory depreciation
184.
president’s salary
185.
salesmen commissions
186.
wood
187.
factory supervisor’s salary
188.
assembler’s wages
189.
plastic parts
190.
machine operator
191.
maintenance supplies
192.
the process by which factory overhead is assigned to a cost object
193.
these make up the work in process subsidiary ledger
194.
serves as the basis for recording direct labor on a job cost sheet
195.
prepared when materials that have been ordered are received and inspected
196.
serves as the basis for recording materials used
