Chapter 5 – Job-Order Costing
112. Refer to Figure 5-4. What is the selling price of Job 806?
a.
$682
b.
$1,320
c.
$1,440
d.
$920
e.
$1,023
Selling price = $682 × 1.50 = $1,023
Figure 5-5.
Brillant Design Company makes custom chairs for individual customers. On October 1, there was one job in process, Job
243, with a cost of $1,300. Jobs 244, 245, and 246 were started during the month of October. Data on costs added during
the month are as follows:
Job 244
Job 246
Direct Materials
$2,300
$9,200
Direct Labor
980
5,010
Overhead is applied to production at the rate of 70% of direct labor cost. Job 245 was completed on October 14 and the
client was billed at cost plus 55%. All other jobs remained in process.
113. Refer to Figure 5-5. Calculate the balance in Work-in-Process on October 31.
a.
$17,717
b.
$22,875
c.
$36,653
d.
$32,820
e.
$15,820
BWIP
Total
$14,970
$17,717
$36,653
114. Refer to Figure 5-5. What is the price of Job 245?
a.
$20,204.20
b.
$10,627.70
c.
$22,310.50
d.
$18,761.20
e.
$14,399.50
Total cost
Chapter 5 – Job-Order Costing
115. Refer to Figure 5-5. If selling and administrative expense for the month of October equaled $ 2,000, what is
operating income for the month of October?
a.
$14,399.50
b.
$3,109.50
c.
$5,109.50
d.
$2,000.00
Price
Cost
Profit
Selling & admin exp.
Operating income
Figure 5-6.
Stutz, Inc. designs and builds basketball gymnasiums. Each gymnasium is custom-built to individual customers’
specifications. Stutz uses job-order costing to keep track of its costs. In February it worked on three jobs. Data for these
jobs are as follows:
Job 175
Job 178
Job 179
Balance 2/1
$13,790
$ 0
$ 0
Direct Materials
16,200
8,500
30,500
Direct Labor Cost
23,300
7,600
45,000
Machine Hours
400 hrs.
300 hrs.
2,000 hrs.
Overhead is applied to jobs at the rate of $25 per machine hour. By February 28, Job 178 is the only one unfinished. The
balance of Finished Goods on February 1 is $94,000 (consisting of Job 177). Jobs 177 and 179 are sold during February.
Stutz sells its product at cost plus 40%.
116. Refer to Figure 5-6. Calculate the balance in Work-in-Process on February 28.
a.
$23,600
b.
$16,100
c.
$212,390
d.
$0
$ 8,500
7,600
7,500 ($25 × 300)
$23,600
117. Refer to Figure 5-6. Calculate the balance of Finished Goods at February 28.
a.
$63,290
b.
$39,500
c.
$53,290
d.
$63,690
Price
Chapter 5 – Job-Order Costing
e.
$0
118. Refer to Figure 5-6. What is Cost of Goods Sold for February?
a.
$125,500
b.
$219,500
c.
$307,300
d.
$175,700
e.
$310,100
$125,500 + $94,000 = $219,500 total cost of both jobs
119. Refer to Figure 5-6. What is sales revenue for February?
a.
$219,500
b.
$175,700
c.
$131,600
d.
$307,300
e.
$237,300
Figure 5-7.
Laudermilk produces dairy equipment. Most of its jobs have a number of units per job. The company has two different
departments through which all jobs pass. Overhead is applied using a plantwide rate of $13 per direct labor hour. Direct
labor wages average $8 an hour. Data for Job #3 for the year is:
Direct materials
$40,000
Direct labor costs
Dept. A
$60,000
Dept. B
12,000
Machine hours used
Dept. A
200 hrs.
Dept. B
2,400 hrs.
Units produced
20,000 units
120. Refer to Figure 5-7. Compute the total cost of Job #3.
a.
$229,000
b.
$112,000
c.
$134,600
d.
$145,800
e.
$231,600
Chapter 5 – Job-Order Costing
$ 40,000
117,000
(72,000 / $8) = 9,000 direct labor hours × $13 per hour
Total
121. Refer to Figure 5-7. Compute the cost per unit.
a.
$11.58
b.
$5.60
c.
$5.73
d.
$11.45
e.
none of these
$ 40,000
117,000
9,000 direct labor hours × $13 per hour
Total
Figure 5-8.
John’s Water Slides makes custom water slides for hotels. On September 1, there were three jobs in process, Jobs 812,
813, and 814. Two more jobs were started during September, Jobs 815 and 816. By September 30, Jobs 812, 814, and 816
were finished. The following data has been collected:
Job 812
Job 813
Job 814
Job 815
Job 816
9/1 Balance
$615
$830
$ 945
—
—
Direct materials
750
235
1,280
$200
$915
Direct labor
420
115
560
320
875
Overhead is applied at the rate of 120% of direct labor cost. Jobs are sold at cost plus 60%. Selling and administrative
expenses for September totaled $2,950. By September 30, Jobs 812 were 816 are sold, but the customer who ordered Job
814 decided he did not want the slide so it is still in the warehouse.
122. Refer to Figure 5-8. Calculate the ending balance in Work-in-Process as of September 30.
a.
$2,222
b.
$1,700
c.
$1,961
d.
$3,555.20
e.
$1,392
Jobs 813 and 815 are the only jobs left in process.
Job 813
Job 815
BWIP
$ 830
Direct materials
235
200
Direct labor
115
320
Total
$904
$1,318 + $904 = $2,222
Chapter 5 – Job-Order Costing
123. Refer to Figure 5-8. What is the ending balance of Finished Goods if the beginning balance was $0?
a.
$3,457
b.
$5,531.20
c.
$8,206.40
d.
$13,737.60
e.
$2,785
124. Refer to Figure 5-8. What is the selling price of Job 816?
a.
$4,544
b.
$2,840
c.
$2,864
d.
$3,408
e.
$0, it is not completed yet.
125. Refer to Figure 5-8. What is the cost of goods sold for September?
a.
$5,129
b.
$8,206.40
c.
$5,720
d.
$3,575
e.
$8,586
BWIP
Total
126. Refer to Figure 5-8. What is John’s operating income for the month of September?
a.
$127.40
b.
$8,206.40
c.
$3,077.40
d.
$0
e.
None of these.
Chapter 5 – Job-Order Costing
Figure 5-9.
Warwick Company has the following transactions for the month of September:
Purchased materials on account for $220,384.
Materials requisitioned for $91,562.
Direct labor for the month was incurred (but not yet paid) of $69,000.
Actual overhead for the month was $41,000. It has not been paid yet. (Charge to various payables.)
Overhead is applied to production at the rate of 65% of direct labor.
Jobs totaling $42,500 were transferred from Work-in-Process to Finished Goods.
Jobs costing $23,000 were sold.
Balances at the beginning of the month were:
Materials
22,760
Work-in-Process
0
Finished Goods
10,040
127. Refer to Figure 5-9. Calculate the Ending Balance of Raw Materials.
a.
$220,384
b.
$151,582
c.
$185,320
d.
$22,760
e.
91,562
Ending raw materials = $220,384 + $22,760 – $91,562 = $151,582
128. Refer to Figure 5-9. What is the ending balance in Work-in-Process?
a.
$162,912
b.
$113,083
c.
$166,414
d.
$123,870
e.
$0
129. Refer to Figure 5-9. What is the correct journal entry to record actual overhead for the month?
a.
Overhead Control 41,000
Various Payables 41,000
b.
Work-in-Process 41,000
Various Payables 41,000
c.
Various Payables 41,000
Work-in-Process 41,000
Sales (COGS × 1.60)
Less: Cost of goods sold
Gross margin
Less: Operating expenses
Operating income
Chapter 5 – Job-Order Costing
d.
Various Payable 41,000
Overhead Control 41,000
e.
none of these are correct
a
130. Refer to Figure 5-9. What is the journal entry to record applied overhead for the month?
a.
Work-in-Process 44,850
Overhead Control 44,850
b.
Various Payables 44,850
Overhead Control 44,850
c.
Overhead Control 44,850
Work-in-Process 44,850
d.
Overhead Control 44,850
Various Payables 44,850
a
131. Refer to Figure 5-9. What is the ending balance of Finished Goods?
a.
$23,321
b.
$29,540
c.
$64,321
d.
$0
e.
$10,040
Ending Balance = $10,040 + $42,500 – 23,000 = $29,540
Figure 5-10.
The King Corporation manufactures custom-made furniture. The following data pertains to Job X4A:
Direct materials placed into production
$9,000
Direct labor hours worked
300 hours
Direct labor rate per hour
$15
Machine hours worked
100 hours
Plantwide overhead rate is $22.50 per machine hour.
132. Refer to Figure 5-10. One-half of Job X4A was sold for $10,000. What is the total amount of costs assigned to Job
X4A?
a.
$9,000
b.
$20,250
c.
$13,500
d.
$15,750
SUPPORTING CALCULATIONS:
$9,000 + ($15 × 300) + ($22.50 × 100) = $15,750
133. Refer to Figure 5-10. Job X4A consists of 500 units. One-half of Job X4A was sold for $10,000. What is the cost per
unit for Job X4A?
a.
$18
Chapter 5 – Job-Order Costing
b.
$31.50
c.
$27
d.
$40.50
134. When the work-in-process account is debited for direct labor, what account is usually credited?
a.
Cost of Goods Sold
b.
Sales Revenue
c.
Wages Payable
d.
Overhead Control
e.
Accounts Receivable
c
135. When overhead is debited to Overhead Control, what is the credit?
a.
Various payable accounts
b.
Cost of Goods Sold
c.
Work in Process
d.
Finished Goods
e.
Accounts Receivable
a
136. Which of the following accounts is debited when goods are sold?
a.
Finished Goods
b.
Overhead Control
c.
Raw Materials
d.
Cost of Goods Sold
e.
Sales Revenue
137. What account is credited when goods are sold?
a.
Accounts receivable
b.
Cost of Goods Sold
c.
Finished Goods
d.
Raw materials
e.
Work-in-process
c
138. What type of event would cause two separate journal entries to be made?
a.
Transferring the good to Finished Goods
b.
Applied overhead to production based on direct labor hours
c.
Transferring the goods from Raw Materials to Work–in-Process
d.
Closing overapplied overhead to Cost of Goods Sold
e.
Selling the good
Chapter 5 – Job-Order Costing
e
139. When purchasing raw materials on account, what type of accounts would increase?
a.
Assets and equity
b.
Liabilities and expenses
c.
Liabilities and revenues
d.
Assets and liabilities
e.
Assets and expenses
140. When a job costing $5,000 is completed, the following journal entry is made:
a.
Finished Goods 5,000
Cost of Goods Sold 5,000
b.
Cost of Goods Sold 5,000
Finished Goods 5,000
c.
Work-in-Process 5,000
Finished Goods 5,000
d.
Finished Goods 5,000
Work-in-Process 5,000
e.
Cost of Goods Sold 5,000
Sales 5,000
141. On April 9 of the current year, Job XX4 was completed. The job cost sheet showed a total of $4,000 in direct
materials and $6,000 in direct labor at a rate of $20 per direct labor hour. Plantwide overhead is applied at $30 per direct
labor hour. The debit to Finished Goods Inventory to record the completion of Job XX4 is
a.
$13,000.
b.
$9,000.
c.
$4,000.
d.
$19,000.
$4,000 + $6,000 + [$30 × ($6,000 / $20)] = $19,000
142. At the beginning of the year, Fluman Corporation estimates overhead will be $150,000. If the actual overhead for the
year is $152,000 and the applied overhead for the year is $143,000, what is the journal entry needed to reconcile the
overhead variance? Assume that the overhead variance is immaterial.
a.
Cost of Goods Sold 9,000
Overhead Control 9,000
b.
Overhead Control 9,000
Cost of Goods Sold 9,000
c.
Cost of Goods Sold 7,000
Overhead Control 7,000
d.
Overhead Control 7,000
Cost of Goods Sold 7,000
e.
none of these
Chapter 5 – Job-Order Costing
Figure 5-11.
Olson Corporation constructs new homes. Assume that Olson uses a job costing system. During May of the current year,
the following transactions occurred:
Olson purchased $4,500 of lumber on account.
Olson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash.
143. Refer to Figure 5-11. The journal entry to record the requisition of lumber for Olson would include a
a.
debit to Work-in-Process of $4,500.
b.
debit to Materials Inventory of $3,750.
c.
credit to Finished Goods of $3,750.
d.
debit to Work-in-Process of $3,750.
144. Refer to Figure 5-11. The journal entry to record labor for Olson would include a
a.
debit to Finished Goods of $750.
b.
debit to Wages Payable of $750.
c.
credit to Finished Goods of $750.
d.
debit to Work-in-Process of $750.
SUPPORTING CALCULATIONS:
Figure 5-12.
Walter Company uses a job-order costing system to account for product costs. The following information pertains to the
current year:
Materials placed into production
$140,000
Indirect labor
40,000
Direct labor (10,000 hours)
160,000
Depreciation of factory building
60,000
Other plantwide overhead
100,000
Increase in work-in-process inventory
30,000
Plantwide overhead rate is $18 per direct labor hour.
145. Refer to Figure 5-12. What is the total amount credited to Materials Inventory for Walter in the current year?
a.
$480,000
b.
$170,000
c.
$140,000
d.
$110,000
SUPPORTING CALCULATIONS: Materials used in production = $140,000
Actual Overhead
$152,000
Applied Overhead
Underapplied overhead
Chapter 5 – Job-Order Costing
146. Refer to Figure 5-12. What is the total amount debited to Finished Goods Inventory in the current year?
a.
$490,000
b.
$510,000
c.
$450,000
d.
$550,000
SUPPORTING CALCULATIONS:
147. McElligott Doll Company had the following overhead costs and production for two months. The dolls are identical to
each other.
September
January
Actual overhead
$12,000
$12,000
Number of dolls
3,000
2,000
A.
What is the overhead cost per doll per month?
B.
What type of costing is McElligott using? What is the main issue with using this type of
costing?
For September the unit overhead cost per doll is $4 ($12,000 / 3,000). For January the
148. Williams Incorporated estimated overhead to be $440,000 and direct labor hours to be 100,000 for the year. Actual
direct labor ended up being 120,000 hours. Actual overhead for the year amounted to $500,000.
A.
What is the predetermined overhead rate?
B.
What is the applied overhead for the year?
C.
What is the amount of under- or over-applied overhead at the end of the year?
A.
predetermined overhead rate = $440,000 / 100,000 = $4.40 per direct labor hour
B.
applied overhead = $4.40 × 120,000 = $528,000
C.
$528,000 − $500,000 = $28,000 over-applied overhead
149. At the beginning of the year Grey Corporation estimated the following:
Assembly Department
Packaging Department
Overhead
$ 840,000
$ 210,000
Direct labor hours
80,000 hrs.
4,000 hrs.
Machine hours
20,000 hrs.
12,000 hrs.
Grey uses departmental overhead rates. In the assembly department , overhead is applied on direct labor hours. In the
packaging department, overhead is applied on the basis of machine hours. Actual data for the month of April are as
follows:
Chapter 5 – Job-Order Costing
Assembly Department
Packaging Department
Overhead
$ 42,759
$ 20,400
Direct labor hours
4,000 hrs.
300 hrs.
Machine hours
1,000 hrs.
1,200 hrs.
Required:
A.) Calculate the predetermined overhead rate for the assembly and packaging departments.
B.) Calculate the overhead applied to production in each department for the month of April.
C.) Calculate how much each department’s overhead is overapplied/underapplied.
$20,400 – 21,000 = $600 overapplied
150. A company has two departments that all goods pass through, machining and assembly. Machining overhead is
applied based on machine hours and assembly overhead is applied based on direct labor hours. Data on each department is
as follows:
Machining
Assembly
Budgeted overhead
$75,000
$40,000
Budgeted direct labor hours
5,000 hrs.
10,000 hrs.
Budgeted machine hours
25,000 hrs.
1,000 hrs.
Actual overhead
$75,400
$39,200
Actual direct labor hours
5,203 hrs.
9,980 hrs.
Actual machine hours
25,040 hrs.
850 hrs.
A.
Calculate the overhead rate for each department.
B.
What is each department’s applied overhead?
C.
Calculate each department’s overhead variance. Specify whether it is overapplied or
underapplied.
A.
Machining OH rate = $75,000 / 25,000 = $3 per machine hour
Assembly OH rate = $40,000 / 10,000 = $4 per direct labor hour
B.
Machining applied OH = $3 × 25,040 = $75,120
Assembly applied OH = $4 × 9,980 = $39,920
C.
Machining OH variance = $75,400 − $75,120 = $280 underapplied
Assembly OH variance = $39,920 − $39,200 = $720 overapplied
Chapter 5 – Job-Order Costing
151. Elf Company produces ornamental trees and uses normal costing. Elf applies overhead based on direct labor hours.
The following data are provided:
Budgeted
Actual
Overhead
$400,000
$392,000
Machine hours
20,000 hrs.
18,000 hrs.
Direct labor hours
16,000 hrs.
17,840 hrs.
Direct materials cost
$521,000
Direct labor cost
$410,000
Units produced
10,000 units
A.
Calculate applied overhead.
B.
Calculate the unit cost.
A.
Predetermined OH rate = $400,000 / 16,000 = $25 per direct labor hour
B.
Unit cost = ($521,000 + $410,000 + $446,000) / 10,000 = $137.70 per ornamental tree
152. Pribil Farm Equipment is a job-order costing manufacturer that uses a plantwide overhead rate based on direct labor
hours. Estimations for the year include $420,000 in overhead and 30,000 direct labor hours. Pribil worked on five jobs in
March. Data are as follows:
Job 89
Job 90
Job 91
Job 92
Job 93
Balance, 3/1
$23,110
$18,240
$ 9,510
$ 0
$ 0
Direct materials
13,000
17,210
22,900
15,240
8,210
Direct labor cost
8,075
11,500
16,250
9,750
4,860
Direct labor hours
1,615 hrs.
2,300 hrs.
3,250 hrs.
1,950 hrs.
972 hrs.
By March 31, Jobs 89 and 91 were completed and sold. The rest of the jobs remained in process.
A.
Calculate the plantwide overhead rate.
B.
Calculate the Work in Process on March 31.
C.
Calculate the cost of goods sold for March.
D.
Assume Pribil marks up cost by 40%. What is the selling price of Jobs 89 and 91?
A.
$420,000 / 30,000 = $14 per direct labor hour
B.
$79,150 + $52,290 + $26,678 = $158,118
Balance, 3/1
Direct materials
17,210
15,240
8,210
Direct labor cost
11,500
9,750
4,860
Overhead
Total
C.
Job 89: ($23,110 + $13,000 + $8,075) + (1,615 × $14) = $66,795
Job 91: ($9,510 + $22,900 + $16,250) + (3,250 × $14) = $94,160
COGS = $66,795 + $94,160 = $160,955