Chapter 17(2): Job Order Costing
114.
Aspen Technologies has the following budget data:
Estimated direct labor hours
15,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$198,000
If factory overhead is to be applied based on direct labor hours, the predetermined overhead rate is
a. $7.50
b. $13.20
c. $2.20
d. $16.50
115.
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it
estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual factory
overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the amount of
over
applied or under applied manufacturing overhead at the end of the year?
a.
$6,000 over applied
b.
$6,000 under applied
c.
$54,800 over applied
d.
$54,800 under applied
116.
The following budget data are available for Sharp Company:
Estimated direct labor hours
12,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$179,000
Actual direct labor hours
11,500
Actual direct labor dollars
$92,000
Actual factory overhead costs
$180,000
If factory overhead is to be applied based on direct labor dollars, the predetermined overhead rate is
a. 199%
b. 196%
c. $14.92
d. $15.65
117.
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it
estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual
manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the
predetermined overhead rate per direct labor hour?
a. $12.00
b. $10.00
c. $12.57
d. $10.48
118.
A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it
estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual
manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. The entry to
apply
the factory overhead costs for the year would include a
a.
debit to factory overhead for $360,000
b.
credit to factory overhead for $432,000
c.
debit to factory overhead for $377,200
d.
credit to factory overhead for $360,000
119.
The following budget data are available for Sharp Company:
Estimated direct labor hours
12,000
Estimated direct labor dollars
$90,000
Estimated factory overhead costs
$180,000
Actual direct labor hours
11,500
Actual direct labor dollars
$92,000
Actual factory overhead costs
$181,000
If factory overhead is applied based on direct labor hours, the amount of overhead to be applied is
a. $180,000
b. $181,000
c. $172,500
d. $184,000
Chapter 17(2): Job Order Costing
Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of
the year. Below is a list of all the jobs for the quarter:
Balance
Job No. 356
$ 450
Job No. 357
1,235
Job No. 358
378
Job No. 359
689
Job No. 360
456
Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
120.
What is the ending balance of Work in Process for Adams Company at the end of the first quarter?
a.
$0
b. $456
c. $3,208
d. $2,752
121.
What is the ending balance of Cost of Goods Sold for Adams Company at the end of the first quarter?
a. $456
b. $2,685
c. $1,685
d. $685
122.
What is the ending balance of Finished Goods for Adams Company at the end of the first quarter?
a. $456
b. $1,067
c. $1,685
d. $2,752
123.
What is the balance of Sales for Adams Company at the end of the first quarter?
a. $1,685
b. $2,685
c. $1,000
d. $685
124.
What is the gross profit for Adams Company at the end of the first quarter?
a. $1,685
b. $2,685
c. $1,000
d. $685
125.
Bar code scanners are now being used to track incoming materials and to electronically transmit this data. Scanners
have replaced which of the following?
a.
receiving report
b.
materials requisition
c.
materials ledger
d.
job cost sheet
126.
A separate account for each material is found in a
a.
general ledger
b.
materials ledger
c.
receiving report
d.
job cost sheet
127.
The materials requisition is used to
a.
release materials from the storeroom to the factory
b.
release finished goods to the shipping department
c.
record the acquisition of materials from a vendor
d.
record and electronically transmit materials data in place of a receiving report
128.
Period costs are
a.
found on the balance sheet
b.
not involved in the production process
c.
classified as direct labor, direct material, or factory overhead
d.
found on the job order cost sheets
129.
The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000
hours.
The machine hours for the month of April for all of the jobs was 4,780. If the actual factory overhead totaled
$141,800, determine the over- or under applied amount for the month.
a.
$7,575 under applied b. $35,220 under applied
c. $7,575 over applied d. $35,220 over applied
130.
Period costs are classified as either
a.
selling expenses or production expenses
b.
administrative expense or production expenses
c.
selling expenses or administrative expenses
d.
general expenses or selling expenses
131.
The Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company
has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000
hours. The total machine hours for the year was 54,300. The actual factory overhead for the year was $1,375,000.
Determine the over- or under applied amount for the year.
a.
$17,500 over applied b. $17,500 under applied
c. $118,250 over applied d. $118,250 under applied
132.
Sanders Inc. has applied $567,988 of overhead to jobs in the cost ledger. Actual overhead at the end of the year is
$575,000. The adjustment for over or under applied overhead is
a.
$7,012 over applied, increase Cost of Goods Sold
b.
$7,012 under applied, increase Cost of Goods Sold
c.
$7,012 over applied, decrease Cost of Goods Sold
d.
$7,012 under applied, decrease Cost of Goods Sold
133.
All of the following are true regarding product costs except
a.
product costs are found on the balance sheet until they are sold
b.
product costs consist of direct labor, direct materials, and factory overhead
c.
product costs can be found in three accounts on the balance sheet
d.
product costs include sales and administrative expenses
134.
Job cost sheets can provide information to managers for all except
a.
the cost impact of materials changes
b.
the cost impact of continuous improvement in the manufacturing process
c.
the cost impact of materials price or direct labor rate changes over time
d.
utilities, managerial salaries, and depreciation of computers in the corporate office
135.
A difference in quantity of materials used on two comparable jobs may be caused by
a.
inadequately trained employees
b.
poor quality materials
c.
employee carelessness
d.
all of these
136.
Which of the following would not be found in the accounting system of a service provider?
a.
cost ledger
b.
finished goods ledger
c.
deferred revenue account
d.
job cost sheets
137.
Which of the following entries would not be found on the books of a service provider?
a.
a debit to Work in Process; and a credit to Materials
b.
a debit to Work in Process; and a credit to Wages Payable
c.
a debit to Work in Process; and a credit to Overhead
d.
a debit to Cost of Services; and a credit to Work in Process
138.
In a job order cost accounting system used by a service business, which of the following items would normally not
be included as part of overhead?
a.
materials
b.
direct labor
c.
rent
d.
supplies
139.
The direct labor and overhead costs of providing services to clients are accumulated in
a.
finished services expense
b.
work in process
c.
administrative salaries expense
d.
overhead
140.
When a job is completed in a service organization, the job costs are transferred to the
a.
work in process account
b.
cost of services account
c.
finished goods account
d.
cost of goods sold account
141.
Define and discuss the two main types of cost accounting systems for manufacturing operations. What are their
similarities and differences?
142.
Record the journal entries for the following transactions:
1.
March 10: 500 units of raw materials were purchased on account at $4.00 per unit.
2.
March 15: 250 units of raw materials were requisitioned at $4.50 per unit for production, Job 872.
3.
March 25: 215 units of raw materials were requisitioned at $5.00 per unit for production, Job 879.
143.
The Cavy Company accumulated 560 hours of direct labor on Job 345 and 800 hours on Job 777. The direct labor
was incurred at a rate of $20 per direct labor hour for Job 345 and $21 per direct labor for Job 777. Journalize the
entry to record the flow of labor costs into production.
144.
During April, Cavy Company incurred factory overhead as follows:
Indirect materials
$11,000
Factory supervision labor
4,000
Utilities
500
Depreciation (factory)
700
Small tools
300
Equipment rental
750
Record the entry for factory overhead incurred during April.
145.
Cavy Company estimates that total factory overhead costs will be $660,000 for the year. Direct labor hours are
estimated to be 100,000.
Determine (a) the predetermined factory overhead rate; (b) the amount of factory overhead applied to Job 345 if
the
amount of direct labor hours is 560 and Job 777 if the amount of direct labor hours is 800; and (c) prepare the
journal
entry to apply factory overhead for April according to the predetermined overhead rate.
Work in Process
146.
The Cavy Company estimates that the factory overhead for the following year will be $1,470,000. The company
has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000
hours.
Calculate the predetermined overhead rate to apply factory overhead.
147.
The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company
has
determined that the basis for applying factory overhead will be machine hours, which is estimated to be 40,000
hours.
There are 4,780 machine hours for all of the jobs in the month of April. What is the amount that will be
applied to all
of the jobs for the month of April?
148.
The Cavy Company estimates that the factory overhead for the following year will be $1,470,000. The company
has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000
hours.
The machine hours for the month of April for all of the jobs was 4,780. Prepare the journal entry to apply
factory
overhead.
149.
At the end of April, Cavy Company had completed Jobs 766 and 765. The individual job cost sheets reveal the
following information:
Job
Direct Materials
Direct Labor
Machine Hours
Job No. 765
$5,670
$3,500
27
Job No. 766
$8,900
$4,775
44
Job 765 produced 152 units, and Job 766 consisted of 250 units.
Assuming that the predetermined overhead rate is applied by using machine hours at a rate of $200 per hour,
determine the (a) balance on the job cost sheets for each job, and (b) the cost per unit at the end of April.
150.
Cavy Company completed 26,000 units during the year at a cost of $2,139,800. The beginning finished goods
inventory was 5,000 units valued at $405,000. Assuming a FIFO cost flow, determine the cost of goods sold for
20,000 units.
151.
The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has
decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000
hours.
The machine hours for the month of April for all of the jobs was 4,780. If the actual factory overhead totaled
$141,800, determine the over- or under applied amount for the month.
152.
The Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company
has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000
hours. The total machine hours for the year was 54,300 hours. The actual factory overhead for the year was
$1,375,000.
a)
Determine the total factory overhead amount applied.
b)
Calculate the over- or under applied amount for the year.
c)
Prepare the journal entry to close Factory Overhead into Cost of Goods Sold.
153.
The Winston Company estimates that the factory overhead for the following year will be $1,250,000. The company
has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 50,000
hours. The total machine hours for the year was 54,300. The actual factory overhead for the year was $1,348,800.
a)
Determine the total factory overhead amount applied.
b)
Calculate the over- or under applied amount for the year.
c)
Prepare the journal entry to close Factory Overhead into Cost of Goods Sold.
154.
Cranston Company estimates the following overhead costs for the coming year:
Equipment depreciation
$160,000
Equipment maintenance
60,000
Supervisory salaries
40,000
Factory rent
100,000
Total
$360,000
Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year.
Required:
a.
Calculate the predetermined overhead rate using direct labor costs as the allocation base.
b.
Calculate the predetermined overhead rate using machine hours as the allocation base.
155.
Flagler Company allocates overhead based on machine hours. It estimated overhead costs for the year to be
$420,000. Estimated machine hours were 50,000. Actual hours and costs for the year were 46,000 machine hours
and $380,000 of overhead.
Required:
(a)
Calculate the overhead application rate for the year.
(b)
What is the amount of applied overhead for the year?
(c)
What is the amount of under or over applied overhead for the year? Indicate whether it is over or under applied.
156.
The Jase Company allocates overhead based on a predetermined overhead rate of $9.00 per direct labor hour. Job
J904 required 8 tons of direct material at a cost of $600 per ton and took employees who earn $21 per hour a total
of
80 hours to complete. What is the total cost of Job J904?
157.
Technics Inc., a manufacturing company, utilizes job order costing. Each division establishes its own estimates
regarding overhead, which are as follows:
Division A
Division B
Total estimated overhead
$128,000
$261,000
Total estimated machine hours
16,000
72,500
Total estimated direct labor costs
$155,000
$290,000
Required:
If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage
of
direct labor costs, what would the predetermined overhead rate be for each division?
158.
Crain Company budgeted 35,000 direct labor hours and incurred 40,000 direct labor hours. It incurred $780,000 of
overhead and estimated overhead was $735,000.
What is Crain’s predetermined overhead rate? Was overhead over applied or under applied for the year? By how
much?