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Exam 2: Job Order Costing

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Question 61

Multiple Choice

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Service firms:

A) tend to use a lot of direct materials in addition to billable hours.
B) tend to incur few indirect costs that cannot be traced to specific clients or accounts.
C) assign indirect costs to individual clients or accounts based on an allocation base such as billable hours.
D) use process costing to assign costs to individual clients or accounts.

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

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Question 62

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

A) True
B) False

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Question 63

Multiple Choice

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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?

When units are completed,the cost associated with the job is debited to which account?

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

Cost of goods sold is the amount of cost transferred:

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $415,000 and actual labor hours were 21,000.The amount of manufacturing overhead applied to production would be:

Manufacturing overhead was estimated to be $200,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $215,000,and actual labor hours were 21,000.The amount credited to the Manufacturing Overhead account would be:

Which of the following would be used to apply manufacturing overhead to production for the period?

Which of the following is a characteristic of a manufacturing environment that would use job order costing?

When units are sold,the cost associated with the units is debited to which account?

In a service firm,the cost associated with time that employees spend on training,paperwork,and supervision is considered part of manufacturing overhead.

Which of the following would be used to record the labor cost that is not traceable to a specific job?

Mendez Inc.had the following information for the preceding year: Additional information for the year is as follows: What was the beginning Finished Goods Inventory balance on 1/1?

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.To dispose of the balance in the Manufacturing Overhead account,which of the following would be correct?

Manufacturing overhead was estimated to be $400,000 for the year along with 20,000 direct labor hours.Actual manufacturing overhead was $415,000,and actual labor hours were 21,000.To dispose of the balance in the Manufacturing Overhead account,which of the following would be correct?

Sawyer Company had the following information for the year: Sawyer 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 Inventory balance of $9,000.What was cost of goods manufactured?

Geller Cabinets is a custom cabinet builder.They recently completed a set of kitchen cabinets (Job Number 12478),as summarized below: Geller applies overhead to jobs at a rate of $15 per direct labor hour. a.How much overhead would be applied to Job #12478? b.What is the total cost of Job #12478?

Superior Corp.applies manufacturing overhead to production at 75% of direct labor cost.During the year ended 20xx,manufacturing overhead of $150,000 was applied to production;actual manufacturing overhead was $156,000.Ending Work in Process Inventory was $22,000 and ending Finished Goods Inventory was $36,000.Work in Process Inventory increased by 10% during the year and Finished Goods Inventory increased by 20% during the year.Unadjusted Cost of Goods Sold was $575,000. Complete the following schedule:

Manufacturing overhead is applied to each job using which formula?