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Exam 19: Job Order Costing

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Question 21

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BC Company uses a job order cost accounting system.During the month of April,the following events occurred: (a)Purchased raw materials on credit,$32,000. (b)Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials. (c)Paid factory payroll for the month totaling $37,700 which includes $8,200 indirect labor. (d)Assigned the factory payroll to jobs and overhead. Make the necessary journal entries to record the above transactions and events.

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Question 22

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The following information is available for the Millennium Corporation for the current year: Millennium Corporation uses a predetermined overhead rate of 150% of direct labor cost.Prepare journal entries for the following transactions and events: (a)Purchase of raw materials on account. (b)Assignment of materials costs to Goods in Process Inventory and Factory Overhead. (c)Payment of Factory Payroll in cash. (d)Assignment of Factory Payroll to Goods in Process Inventory and Factory Overhead. (e)Recording of other factory overhead.Assume that all items other than depreciation are paid in cash. (f)Assignment of Factory Overhead to Goods in Process Inventory. (g)Transfer of goods completed to Finished Goods Inventory. (h)Recording cost of goods sold. (i)Assignment of over- or underapplied overhead to Cost of Goods Sold.

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Question 23

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Cost accounting systems accumulate costs and then assign them to products or services.

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?

Large aircraft producers such as McDonnell Douglas normally use:

The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed.The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800.Therefore,the company's overhead application rate is:

BVD Company uses a job order cost accounting system and last period incurred $80,000 of overhead and $100,000 of direct labor.BVD estimates that its overhead next period will be $75,000.It also expects to incur $100,000 of direct labor.If BVD bases applied overhead on direct labor cost,their overhead application rate for the next period should be:

Whittier Manufacturing uses a job order cost accounting system that charges overhead to jobs on the basis of direct labor cost.Whittier used the following cost predictions: overhead costs $1,285,750,and direct labor costs of $695,000.At year-end,the company's records show that actual overhead costs for the year are $1,278,800,and actual direct labor costs are $692,000. a.Determine the predetermined overhead rate for the year. b.Compute the amount of overapplied or underapplied overhead. c.Prepare the adjusting entry to allocate the over- or underapplied overhead assuming the amount if immaterial.

Key Manufacturing Co.applies factory overhead to production on the basis of direct labor costs.Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800,direct labor costs would be $154,000,and factory overhead costs would be $231,000. (1)If the $28,000 cost of Key's goods in process inventory included $5,200 of direct labor cost,what amount of direct materials cost was included? (2)If $8,100 of the company's $34,300 finished goods inventory was direct materials cost,determine the direct labor cost and factory overhead cost of the finished goods inventory.

Medlar Corp.maintains a Web-based general ledger.Overhead is applied on the basis of direct labor costs.Its bookkeeper accidentally deleted most of the 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 allocation 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.

Materials requisitions and time tickets are cost accounting source documents.

Erlander Company uses a job order cost accounting system.On November 1,$15,000 of direct materials and $3,500 of indirect materials were requisitioned for production.Prepare the general journal entry to record this requisition.

Dell Builders manufactures each house to customer specifications.It most likely would use:

Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Using the following accounts and an overhead rate of 130% of direct labor cost,compute the amount of applied overhead.

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

Austin Company uses a job order cost accounting 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 allocation rate?

If one unit of Product X 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?

Describe how materials flow through a job order cost accounting system,and identify the key documents in the system.

A pricing method where the customer pays the manufacturer for costs incurred on the job plus a negotiated amount or rate of profit is known as a _________________________ basis.