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Exam 15: Job Order Costing and Analysis

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Question 51

True/False

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The journal entry to record the purchase of materials includes a debit to Work in Process Inventory.

A) True
B) False

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Question 52

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If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor,sold for $8.00,and was assigned overhead at the rate of 30% of direct labor costs,how much gross profit was realized from this sale?

A) $8.00.
B) $5.50.
C) $2.50.
D) $1.60.
E) $0.90.

F) B) and C)
G) A) and E)

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Question 53

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Job A3B was ordered by a customer on September 25.During the month of September,Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor.The job was not finished by the end of September,but needed an additional $3,000 of direct materials in October and additional direct labor of $6,500 to finish the job.The company applies overhead at the end of each month at a rate of 200% of the direct labor cost. -What is the amount of job costs added to Work in Process Inventory during October?

Describe the purpose of a job cost sheet,and explain what information is found on the job cost sheet.

Mango Company applies overhead based on direct labor costs.For the current year,Mango Company estimated total overhead costs to be $300,000,and direct labor costs to be $150,000.Actual overhead costs for the year totaled $330,000,and actual direct labor costs totaled $170,000. -At year-end,the balance in the Factory Overhead account is a:

A type of production that yields customized products or services for each customer is called:

Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs,and allocates $18 of overhead for each employee hour worked.Direct materials are assigned to each job according to actual cost.If Job M-47 used $350 of direct materials and took 20 direct labor hours of labor to complete,what is the total cost that should be assigned to the job?

Describe the flow of the raw materials,both direct and indirect,through the inventory accounts from purchase to use.

MOB Corp.applies overhead on the basis of direct labor costs.Its bookkeeper accidentally deleted most of the journal entries that had been recorded for January.A printout of the general ledger (in T-account form)showed the following: A review of the prior year's financial statements,the current year's budget,and January's source documents produced the following information: (1)Accounts Payable is used for raw material purchases only.January purchases were $49,000. (2)Factory overhead costs for January were $17,000 none of which is indirect materials. (3)The January 1 balance for finished goods inventory was $10,000. (4)There was a single job in process at January 31 with a cost of $2,000 for direct materials and $1,500 for direct labor. (5)Total cost of goods manufactured for January was $90,000. (6)All direct laborers earn the same rate ($13/hour).During January,2,500 direct labor hours were worked. (7)The predetermined overhead rate is based on direct labor costs.Budgeted (expected)overhead for the year is $195,000 and budgeted (expected)direct labor is $390,000. Fill in the missing amounts a)through o)above in the T-accounts above.

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

A ________ accounting system accumulates production costs and assigns them to products or services.

Direct materials and direct labor costs are debited to the Factory Overhead account in a job costing system.

A job cost sheet does not contain information that is useful for managing the production process.

The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units.If the overhead applied to these goods is $3,000,and the overhead rate is 75% of direct labor,how much direct materials cost was incurred in producing these units?

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs.Kayak Company's production costs for the year were: direct labor,$30,000; direct materials,$50,000; and factory overhead applied $6,000.The predetermined overhead rate was:

The predetermined overhead rate for Foster,Inc.,is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000.Actual costs incurred were: (a)Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b)Prepare the journal entry to eliminate the over- or underapplied overhead,assuming that it is not material in amount.

Job order costing would be appropriate for companies that produce custom homes and specialized equipment.

EXP,Inc.had the following activities during its most recent period of operations: (a)Purchased raw materials on account for $140,000 (both direct and indirect materials are recorded in the Raw Materials Inventory account). (b)Issued raw materials to production of $130,000 (80% direct and 20% indirect). (c)Incurred factory labor costs of $250,000; allocated the factory labor costs to production (70% direct and 30% indirect). (d)Incurred factory utilities costs of $20,000; this amount is still payable. (e)Applied overhead at 80% of direct labor costs. (f)Recorded factory depreciation,$22,000. Prepare journal entries to record the above transactions.

Job order costing would be appropriate for companies that produce pencils.

Minstrel Manufacturing uses a job order costing system.During one month,Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect.Minstrel incurred a factory payroll of $150,000,of which $40,000 was indirect labor.Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. -Minstrel's beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively.Compute the cost of jobs transferred to Finished Goods Inventory.