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Exam 19: Job Order Costing

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Question 61

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Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?

A) $58,000.
B) $31,600.
C) $86,400.
D) $56,000.
E) $60,000.

F) D) and E)
G) A) and B)

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Question 62

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The collection of cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Work in Process Inventory account in the general ledger.

A) True
B) False

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Question 63

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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: $\begin{array}{|l|c|}\hline \text { Direct materials } & \$ 240,000 \\\hline \text { Direct labor} & 410,000 \\\hline \text { Indirect materials. } & 55,000 \\\hline \text { Indirect labor } & 125,000 \\\hline \text { Sales commissions } & 55,000 \\\hline \text { Factory depreciation } & 170,000 \\\hline \text { Property taxes, factory......... } & 15,000 \\\hline \text { Factory utilities. } & 35,000 \\\hline \text { Advertising......... } & 62,500 \\\hline\text { Factory equipment rental. }&110,000\\\hline\end{array}$ (a) Calculate the predetermined overhead rate and calculate the overhead applied during the year. (b) Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.

Briefly describe how manufacturing firms dispose of overapplied or underapplied factory overhead.

Materials requisitions and time tickets are cost accounting source documents.

The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. - At year-end, Factory Overhead is:

Nutley Company uses a job order cost system and last period incurred $70,000 of overhead and $100,000 of direct labor. Nutley estimates that its overhead next period will be $65,000. The company also expects to incur $100,000 of direct labor. If Nutley bases its overhead applied on direct labor cost, what should be the overhead rate for the next period?

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

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. Materials are assigned to each job according to actual cost. - Jobs are marked up 20% above cost to determine the selling price. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the selling price of the job?

Labor costs in production can be:

Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

When materials are used as indirect materials, their cost is debited to the Factory Overhead account.

The job cost sheet for Job number 83-421 includes the following information: DIRECT MATERIALS: 7/12 Requisition R88-566: 20 units @ \$3.50 per unit 7/13 Requisition R88-576: 18 units @ \$5.00 per unit 7/13 Requisition R88-578: 4 units @ \$25.00 per unit 7/14 Requisition R88-591: 40 units @\$1.25 per unit DIRECT LABOR: 7/12 Employee 19: 8 hours @ \$9.00 per hour 7/13 Employee 19: 6 hours @ \$9.00 per hour 7/13 Employee 37: 6 hours @ \$7.00 per hour 7/14 Employee 19: 5 hours @ \$9.00 per hour 7/14 Employee 92: 5 hours @ $\$ 11.00$ per hour FACTORY OVERHEAD: Assigned at $150 \%$ of direct labor cost.What is the total cost of Job number 83-421? 135

The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.

Period costs for a manufacturing company, such as selling and administrative expenses, are recorded directly to Work In Process Inventory when they are incurred.

A document in a job order costing system that is used to record the costs of producing a job is a(n) :

Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

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?

Time tickets for factory employees during the month of August are summarized as follows: $\begin{array}{l|l} \hline \text {Job 919 } &\$9,800\\\hline \text {Job 920 } &14,650\\\hline \text {Job 921 } &12,250\\ \hline\text {Job 922 } &16,000\\\hline \text { Total direct labor. } & \$52,700\\\hline \text { Indirect labor} & 16,800\\\hline \text { Total labor cost. } &\$69,500\end{array}$ Make the necessary journal entries to record factory payroll for direct and indirect labor.