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Exam 2: Job Order Costing and Analysis

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Question 21

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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.

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Question 22

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The job order cost sheets used by Greene Company revealed the following: Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the balance of Work in Process inventory on May 31?

A) $3,200; $900.
B) $2,900; $1,200.
C) $1,200; $2,900.
D) $1,700; $1,200.
E) $4,100; $0.

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

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Question 23

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

A materials requisition is a source document used by production managers to request materials for production and also used to assign materials costs to specific jobs or to overhead.

Marina Corp. applied overhead to jobs during the period as follows: $\begin{array} { l r r } \text { Jobs finished and sold } & \$ 46,000 \\\text { Jobs started and in process } & 54,000 \\\text { Jobs finished and ursold } & 100,000\end{array}$ The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account. The entry to dispose of this remaining factory overhead balance is:

When indirect labor is recorded, ________ is debited.

The predetermined overhead rate is revised many times during the period to compensate for inaccurate estimates previously made.

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

A company that makes which of the following types of products would best be suited for a job costing system?

A ________ is a separate record maintained for each job.

In a job order costing system, raw materials requisitioned as direct materials are debited to ________; indirect materials are debited to ________.

Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead applied to a job which used $20,000 of direct labor.

At the end of June, job cost sheets for Kennedy Manufacturing show the following total costs accumulated on three custom jobs: Job 203 was started in production in May and the following costs were assigned to it in May: direct materials, $12,000; direct labor, $6,000; and overhead $8,700. Jobs 204 and 205 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 203 and 204 are finished in June, and Job 205 will be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions assuming the company's predetermined overhead rate did not change. a. What is the total cost of direct materials requisitioned in June for the three jobs? b. What is the total direct labor cost incurred during June for the three jobs? c. What predetermined overhead rate is used during June? d. How much total cost is transferred to finished goods during June?

Explain why the Factory Overhead account for a company may have a difference between the amount debited and the amount credited, resulting in an end of period balance prior to adjustment.

If overhead applied is less than actual overhead incurred, it is:

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate?

Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

Service firms cannot use job order costing for determining a selling price for their services.

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

In nearly all job order cost systems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production.