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164. 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?
165. ABC Printing 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.
166. During June, the receipts and issuances of Material No. A2FO are as follows:
Received
June 3
Balance
1,100 units at $15
16
1,700 units at $17
29
900 units at $18
Issued
June 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.
167. 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.
168. 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
Balance, July 1
60,200
Direct materials
147,000
Direct labor
120,000
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 overapplied or underapplied on July 31?
(d)
Determine the cost of the unfinished jobs on July 31.
169. 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
$167,000
(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
67,000
(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
638,000
170. 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 first-in, first-out method.
171. Prepare the journal entry for materials and labor, based on the following:
Raw materials issued:
$850
for Job 609
600
for general use in the factory
Labor time tickets:
$1,600
for Job 609
400
for supervision
172. 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.
173. On January 2nd, Newsprint Manufacturing purchases 5 rolls of paper on account at $125.00 per roll for use
within the production process. On January 5th 4 rolls of this paper are issued to Job 010507A in the Printing
Department. The Printing Department records $675.00 in direct labor and $1,150.00 of factory overhead to Job
010507A. On January 8th Printing transfers Job 010507A to the Folding Department. The folding department
applies $450.00 in direct labor and $655.00 in factory overhead to Job 010507A. Job 010507A is transferred to
Finished Goods Inventory on January 9th.
(a)
Journalize the purchasing of the paper to Raw Materials Inventory.
(b)
Journalize the transfer of raw materials to work in process, the application of direct labor, and the application of manufacturing
overhead to Job 010507A while in the Printing Department.
(c)
Journalize the transfer of Job 010507A to the Folding Department at actual cost.
(d)
Journalize the application of direct labor, and the application of manufacturing overhead to Job 010507A while in the Folding
Department.
(e)
Journalize the transfer of Job 010507A to Finished Goods Inventory at actual cost.
174. The Stamping Department accepted Job 051507A on May 15th to make 1,000 funnels.
To complete the job they requisitioned 1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set.
The cost driver that the Stamping Department uses is drop-forge strokes which are counted on a machine
mounted counter. $2.25 is applied as overhead for each drop-forge stroke. Additionally $375.00 of overhead is
applied to each job due to setup and teardown.
Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader. The job
required 6 1/2 hours of labor by the team.
When the job was complete Job 051507A was transferred to Semi-finished Goods Inventory (SFGI). When the
job was transferred, 20 sheets were returned unused to raw material inventory, 75 grommet sets were returned,
and there were 1,115 strokes on the counter.
Journalize all events depicted as of May 15th.
175. On November 14th the Milling Department has accepted Job 111407A for 1,000 pounds of Cereal Mix.
The bill of materials (BOM) for the Cereal Mix is:
Material:
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
Manufacturing overhead is applied at $5.75 per pound completed, and $75.75 of materials are returned to Raw Materials Inventory. The recipe
produced 1,025 pounds of cereal mix.
(a)
Write the journal entry to transfer raw materials to Job 111407A.
(b)
Write the journal entry to provide labor to Job 111407A.
(c)
Write the journal entry to return 50 pounds oats, 5 pounds of barley, and 5 quarts of honey back to raw materials inventory.
(d)
Write the journal entry to apply manufacturing overhead to Job 111407A.
(e)
Write the journal entry to transfer Job 111407A to finished goods on November 14th.
176. 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
177. The following is a list of costs incurred by several business organizations:
(a)
Telephone cable for a telephone company.
(b)
Subscription to 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 check-out 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.
178. List the accounts used in the cost flow for (a) a manufacturer and (b) a service provider.
179. At the end of the period, Carson Company had the following balances in selected accounts:
Raw Materials Inventory
$ 80,000
Finished Goods
190,000
Work in Process Inventory
70,000
Cost of Goods Sold
1,000,000
Factory Overhead
30,000
Required:
a. Assuming the factory overhead balance is relatively small, prepare the journal entry to close the Factory Overhead account if the balance in the
account is a debit balance. What does a debit balance mean?
b. Assuming the factory overhead balance is relatively small, prepare the journal entry to close the Factory Overhead account if the balance in the
account is a credit balance. What does a credit balance mean?
