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Exam 2: Job Order Costing

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Question 1

Multiple Choice

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McGown Corp has the following information: Additional information for the year is as follows: Compute the unadjusted cost of goods sold.

A) $133,000
B) $242,000
C) $252,000
D) $255,000

E) A) and B)
F) None of the above

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Question 2

Multiple Choice

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Jackson Company had the following information for the year: Jackson Company used a predetermined overhead rate using estimated overhead of $320,000 and 8,000 estimated direct labor hours.Assume the only inventory balance is an ending Finished Goods balance of $19,000.How much overhead was applied during the year?

A) $245,000
B) $343,000
C) $360,000
D) $320,000

E) C) and D)
F) B) and C)

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Question 3

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Service firms:

Optimum Finance Inc.provides budget,savings,and investment services to clients who want a stress-free financial lifestyle.The company customizes a program for each client based on their individual goals that includes budget recommendations,investment counseling,and savings techniques.The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client.Optimum applies all indirect operating costs (e.g. ,rent,utilities,and management salaries) as a percentage of the consultant's labor cost.During the most recent year,the firm estimated that it would pay $500,000 to its consultants and incur indirect operating costs of $750,000.Actual consultant labor costs were $537,500 and actual indirect operating costs were $725,000.What is the predetermined overhead rate that Optimum will use for the current year?

Jenkins Company had the following information for the year: Jenkins Company used a predetermined overhead rate using estimated overhead of $320,000 and 8000 estimated direct labor hours.Assume the only inventory balance is an ending Finished Goods Inventory balance of $19,000.What was adjusted cost of goods sold?

Overhead costs are overapplied if the amount applied to Work in Process is

Which of the following would be used to record the factory supervisor's salary?

A materials requisition form is used to authorize the purchase of direct materials.A materials requisition form is used to control the physical flow of materials out of inventory and into production,and record the cost of raw materials in the accounting system.

A predetermined overhead rate is calculated by dividing estimated total manufacturing overhead cost by estimated units in the allocation base.This is the formula for the predetermined overhead rate.

Manufacturing overhead is applied to each job using which formula?

McGown Corp has the following information: Additional information for the year is as follows: Compute the current manufacturing costs.

Manufacturing overhead was estimated to be $250,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $225,000,and actual direct labor hours were 19,000.The amount credited to the Manufacturing Overhead account would be

Which of the following would be used to record the usage of indirect manufacturing resources?

Process costing is used when all of the products produced are unique.Process costing is used when each unit of the final product comes out identical to the next.

If materials being placed into production are not traced to a specific job,

When goods are completed,a debit is made to Work in Process Inventory and a credit is made to Finished Goods Inventory.When a job is completed,its total manufacturing cost is transferred out of Work in Process Inventory with a credit,and into Finished Goods Inventory with a debit.

Which of the following types of firms would most likely use process costing?

When manufacturing overhead is applied to a job,a credit is made to the Work in Process account.Applied manufacturing overhead is credited to Work in Process inventory.

Optimum Finance Inc.provides budget,savings,and investment services to clients who want a stress-free financial lifestyle.The company customizes a program for each client based on their individual goals that includes budget recommendations,investment counseling,and savings techniques.The company uses a job order cost system that keeps track of the cost of the amount of time financial consultants spend with each client.Optimum applies all indirect operating costs (e.g. ,rent,utilities,and management salaries) as a percentage of the consultant's labor cost.During the most recent year,the firm estimated that it would pay $500,000 to its consultants and incur indirect operating costs of $750,000.Actual consultant labor costs were $537,500 and actual indirect operating costs were $725,000.During the year,Optimum provided 42 hours of consulting services to Joan Clair for which Optimum pays an average of $20 per hour.What is the total cost of providing services to Joan?

The most common method for disposing of the balance in Manufacturing Overhead is to make a direct adjustment to Cost of Goods Sold.The most common method for disposing of the balance in Manufacturing Overhead is to make a direct adjustment to Cost of Goods Sold.Doing so makes sense as long as most of the jobs worked on during the period were completed and sold.