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Exam 7: Job Costing

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Question 1

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Actual costing does not use a predetermined overhead rate to apply manufacturing overhead costs to jobs completed during the period.

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Question 2

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Which of the following is used as the basis for posting to the direct materials section of the job cost sheet?

A) Purchase requisition.
B) Materials requisition.
C) Receiving report.
D) Purchase order.

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Question 3

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Indirect materials and indirect labor are two examples of manufacturing overhead costs.

Demur Inc., a manufacturing company, has provided the following data for the month of April. The balance in the Work-in-Process Inventory account was $10,000 at the beginning of the month and $22,000 at the end of the month. During the month, the company incurred direct materials cost of $63,000 and direct labor cost of $39,000. The actual manufacturing overhead cost incurred was $40,000. The manufacturing overhead cost applied to Work-in-Process was $43,000. The cost of goods manufactured for April was:

Which terms will make the following statement true? When manufacturing overhead is overapplied, the Manufacturing Overhead Control account has a ________ balance and applied manufacturing overhead is greater than ________ manufacturing overhead.

Island Corporation applies overhead based upon machine-hours. Budgeted factory overhead was $375,000 and budgeted machine-hours were 12,500. Actual factory overhead was $387,920 and actual machine-hours were 13,150. Required: a. Compute the overhead application rate. b. Compute the amount of overhead applied to production. c. Determine the amount of over- or underapplied overhead.

The periodic allocation of manufacturing overhead costs to job cost sheets is based on an event, not a transaction.

Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period?

Perion Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 11,200 hours and the total estimated manufacturing overhead was $259,840. At the end of the year, actual direct labor-hours for the year were 10,800 hours and the actual manufacturing overhead for the year was $254,840. Overhead at the end of the year was:

For which of the following businesses would a job costing system be appropriate?

Reyes Corporation applies overhead using an actual costing approach. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050. - How much overhead would be applied to production?

ProBuild Contractors sells to government agencies using a cost-plus contract and to private firms using fixed price contracts. What choices does ProBuild have in the design of its job costing system that affect the cost of the government jobs?

In June, Robust Engineering worked on three contracts: 1,200 hours for Tico Company, 1,100 hours for Navel LLC, and 3,400 hours for Lutron Corp. Robust bills clients at the rate of $150 per hour; labor cost for its engineering staff is $45 per hour. The total number of hours worked in June was 6,000 (any untraced hours are considered overhead), and non-labor overhead costs were $325,000. Overhead is applied to clients at $55 per labor-hour. In addition, Robust had $243,000 in marketing and administrative costs. All transactions are on account. All services were billed. Required: a. Determine the cost of each of the three jobs. b. What is the amount of over- or underapplied overhead? c. How much operating profit did Robust make in June? Assume the over- or underapplied overhead is not closed out each month.

The journal entry to apply manufacturing overhead costs to completed jobs credits either Applied Manufacturing Overhead or Manufacturing Overhead Control.

In computing its predetermined overhead rate, Marple Company inadvertently left its indirect labor costs out of the computation. This oversight will cause:

Reyes Corporation applies overhead using an actual costing approach. Budgeted factory overhead was $266,400, budgeted machine-hours were 18,500. Actual factory overhead was $287,920, actual machine-hours were 19,050. -How much is the over- or underapplied overhead?

Prepare the necessary journal entries from the following information for Blalock Company. a. Purchased materials on account, $56,700. b. Requisitioned materials for production as follows: direct materials - 80 percent of purchases, indirect materials - 15 percent of purchases. c. Direct labor for production is $33,100, indirect labor is $12,500. d. Overhead incurred (not including indirect materials or indirect labor): $52,900. e. Overhead is applied to production based on direct labor cost at the rate of 220 percent. f. Goods costing $97,600 were completed during the period. g. Goods costing $51,320 were sold on account for $77,600. h. Close the overhead control account to Cost of Goods Sold.

At the end of the accounting period, manufacturing overhead costs are applied to uncompleted jobs using the same predetermined overhead rate that is used to apply manufacturing overhead costs to completed jobs.

Golden Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,600 hours. At the end of the year, actual direct labor-hours for the year were 20,400 hours, the actual manufacturing overhead for the year was $506,920, and manufacturing overhead for the year was underapplied by $23,440. The estimated manufacturing overhead at the beginning of the year used to calculate the predetermined overhead rate must have been:

The following selected data were taken from the books of the Owens O-Rings Company. The company uses job costing to account for manufacturing costs. The data relate to April operations. (1) Materials and supplies were requisitioned from the stores clerk as follows: Job 405, material X, $7,000. Job 406, material X, $3,000; material Y, $6,000. Job 407, material X, $7,000; material Y, $3,200. For general factory use: materials A, B, and C, $2,300. (2) Time tickets for the month were chargeable as follows: $\begin{array}{lrr}\text { Job 405 } & \$ 11,000&\text { 3,000hours } \\\text { Job 406 } & 14,000&\text { 3,600hours } \\\text { Job 407 } & 8,000&\text { 1,900hours } \\\text { Indirect labor } & 3,700\end{array}$ (3) Other information: Factory paychecks for $36,700 were issued during the month. Various factory overhead charges of $19,400 were incurred on account. Depreciation of factory equipment for the month was $5,400. Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour. Job orders completed during the month: Job 405 and Job 406. Selling and administrative costs were $2,100. Factory overhead is closed out only at the end of the year. - The balance in the factory overhead account would represent the fact that overhead was: