Chapter 5: Product and Service Costing: Job-Order System
Figure 5-5
Tonneau Corporation had the following information available for October 2016:
Work in Process, October 1 $20,000
Materials placed into production, October 27,500
Direct labor, October 37,500
Factory overhead rate is 150 percent of direct labor costs. Job cost sheets had the following balances:
Job Z1
$32,500
Job Z2
55,000
Job Z3
35,000
Job Z4
18,750
Jobs Z3 and Z4 were not completed at the end of December.
112. Refer to Figure 5-5. What is the balance in Work–in–Process for Tonneau at the end of October?
a. $85,000
b. $87,500
c. $56,250
d. $53,750
113. Refer to Figure 5-5. What is the cost of goods finished during October for Tonneau Corporation?
a. $85,000
b. $87,500
c. $56,250
d. $53,750
Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month: Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-
in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month,
Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Chapter 5: Product and Service Costing: Job-Order System
114. Refer to Figure 5-6. What is the cost of goods sold for the month?
a. $10,730
b. $10,850
c. $12,575
d. none of these
115. Refer to Figure 5-6. What is the ending work–in–process inventory for the month?
a. $10,730
b. $4,250
c. $12,575
d. none of these
116. Refer to Figure 5-6. What is the cost of goods manufactured for the month?
a. $10,730
b. $10,850
c. $12,575
d. none of these
Chapter 5: Product and Service Costing: Job-Order System
117. Canmore Company has the following data pertaining to 2016:
Beginning materials inventory
$ 50,000
Beginning work–in–process inventory
–0-
Beginning finished goods inventory
–0-
Materials placed into production
125,000
Materials purchased on account
137,500
Direct labor incurred (10,000 hours)
62,500
Cost of goods completed (Job BB8)
25,000
Factory overhead rate is 125 percent of direct labor costs.
What is the ending materials inventory balance for Canmore in 2016?
a. $50,000
b. $62,500
c. $12,500
d. $37,500
118. Samuelson Company has the following selected debit balance accounts at the end of the current year: Work-in–
Process, $25,000; Finished Goods, $12,500; Cost of Goods Sold, $37,500; and Factory Overhead, $6,000. The pro-
rated amount charged to Cost of Goods Sold for factory overhead will be
a. $25,000.
b. $3,000.
c. $37,500.
d. $6,000.
119. Under normal costing, which of the following statements is true regarding factory overhead?
a. The balance in factory overhead at the end of the accounting period is closed.
b. Different overhead rates are used for different quantities of predicted activity.
c. The balance in factory overhead at the end of the accounting period is kept open.
d. The immaterial balance in factory overhead at the end of the accounting period is allocated to the cost of goods
sold and inventory accounts.
Chapter 5: Product and Service Costing: Job-Order System
120. Total manufacturing-related costs incurred for Anhauser Company in August for all jobs is as follows:
$ 900
150
1,200
400
1,450
1,650
Assuming Anhauser uses a normal costing system and applies overhead based on a predetermined rate, what is the
credit to Overhead Control to close the account at the end of the year?
a. $900
b. $350
c. $1,450
d. $1,650
121. Which of the following transactions in a job-order costing system requires the procedure of merely moving a job-
order cost sheet from one file to another?
a. applying factory overhead to jobs
b. closing overapplied factory overhead
c. delivering a completed job to a customer
d. moving the job from one production department to another
Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
Assembly Dept.
Finishing Dept.
Total
Overhead costs
$7,500
$22,500
$30,000
Direct labor hours
7,500
2,500
10,000
Machine hours
2,500
7,500
10,000
Production information pertaining to Job 4X5:
Assembly Dept.
Finishing Dept.
Total
Prime costs
$1,250
$-0-
$1,250
Direct labor hours
250
-0-
250
Machine hours
-0-
-0-
-0-
Units produced
500
-0-
500
Chapter 5: Product and Service Costing: Job-Order System
122. Refer to Figure 5-7. What is the plantwide overhead rate based on direct labor hours?
a. $1.00
b. $1.50
c. $3.00
d. $9.00
123. Refer to Figure 5-7. Using the plantwide overhead rate based on direct labor hours what is the cost of Job 4X5? a.
$1,250
b. $2,000
c. $8,750
d. $31,250
124. Refer to Figure 5-7. What is the overhead rate for the Finishing Department based on machine hours?
a. $9.00
b. $3.00
c. $2.25
d. $1.00
125. Refer to Figure 5-7. Based on departmental overhead rates, what is the cost of Job 4X5? Departmental overhead
rates for the Assembly Department are based on direct labor hours, while departmental overhead rates for the
Finishing Department are based on machine hours.
a. $31,250
b. $8,750
c. $2,000
d. $1,250
Chapter 5: Product and Service Costing: Job-Order System
126. Refer to Figure 5-7. What are the total overhead costs assigned to Job 4X5, assuming the Assembly and Finishing
Departments use direct labor hours and machine hours for their bases, respectively?
a. $62.50
b. $250.00
c. $750.00
d. $1,500.00
127. In a job-order costing system, if costs are incurred to rework a job due to inadequate training of personnel, these
costs would be
a. debited to the job.
b. debited to manufacturing overhead control.
c. credited to manufacturing overhead control.
d. credited to the cost of goods sold.
Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The
following overhead activities were budgeted for the year.
Activity
Cost
Driver
Amount of driver
setups
$240,000
number of setups
6,000
purchasing
160,000
number of parts
20,000
other overhead
300,000
direct labor hours
80,000
The following information about the jobs was given for April.
Job 101
Job 102
Job 103
Job 104
Balance 4/1
$64,900
$40,770
$30,500
0
direct materials
54,000
37,900
25,000
11,000
direct labor
80,000
38,500
43,000
21,000
number of setups
40
10
30
200
number of parts
300
80
400
500
direct labor hours
5,000
2,400
5,200
1,200
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Chapter 5: Product and Service Costing: Job-Order System
128. Refer to Figure 5-8. What is the activity rate for purchasing?
a. $ 1.25
b. $ 8
c. $ 3.75
d. $ 40
129. Refer to Figure 5-8. What is the cost of job 102?
a. $ 86,440
b. $ 127,210
c. $ 117,170
d. none of the above
130. Refer to Figure 5-8. What is the cost of goods manufactured?
a. $ 144,400
b. $ 215,670
c. $ 178,340
d. $ 249,610
Chapter 5: Product and Service Costing: Job-Order System
direct materials
$3,000
direct labor ($10/hr)
1,000
overhead (150% DL$)
1,500
131. Refer to Figure 5-8. The ending work in process would consist of the costs of what jobs?
a. Job 102 + Job 103
b. Job 101 + Job 104
c. Job 101 + Job 102 + Job 103 + Job 104
d. Job 101 + Job 102 + Job 103
132. Refer to Figure 5-8. The cost of goods sold would consist of the costs of what jobs?
a. Job 102 + Job 103
b. Job 101 + Job 104
c. Job 101 + Job 102 + Job 103 + Job 104
d. Job 101 + Job 102 + Job 103
Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It
requires the following:
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
133. Refer to Figure 5-9. If the spoilage was considered normal, what is the cost of job 492?
a. $5,500
b. $5,640
c. $5,760
d. $3,000
Chapter 5: Product and Service Costing: Job-Order System
134. Refer to Figure 5-9. If the rework is considered normal spoilage, what is the journal entry for overhead control?
a. no journal entry is needed
b. materials $60
payroll $80
overhead control $140
c. overhead control $140
materials $60
payroll $80
d. none of the above
135. Refer to Figure 5-9. If the rework is considered abnormal spoilage, what is the journal entry for overhead control?
a. no journal entry is needed
b. materials $60
payroll $80
overhead control $140
c. overhead control $140
materials $60
payroll $80
d. none of the above
136. Refer to Figure 5-9. If the rework is considered abnormal spoilage, what is the cost of job 492?
a. $5,500
b. $5,760
c. $3,140
d. $5,640
Chapter 5: Product and Service Costing: Job-Order System
137. The cost of spoilage is added to a job when it is considered to be
a. a result of the process, no matter what job is being worked on.
b. a normal consequence of working on that job.
c. abnormal.
d. all of these.
138. What is the most important factor that causes service firms to generally rank lower in customer satisfaction than
manufacturing firms?
139. Compare and contrast perishability and intangibility in an automobile oil lubrication shop and architectural design
firms.
140. Why are unit costs important? Why do full-cost unit costs change from accounting period to accounting period.
141. Why are firms reluctant to use actual costing? How does normal costing solve the problems?
Chapter 5: Product and Service Costing: Job-Order System
142. Explain why actual costing systems are rarely used in practice.
143. What are the source documents used in a job-order costing system? How do the source documents relate to the job
cost sheet? How do these documents inform work in process?