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Exam 15: Job Order Costing and Analysis

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Question 1

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Andrew Industries purchased $165,000 of raw materials on account during the month of March.The beginning Raw Materials Inventory balance was $22,000,and the materials used to complete jobs during the month were $141,000 direct materials and $13,000 indirect materials. -How should Andrews record the purchase of raw materials for March?

A) Debit Raw Materials Inventory $165,000; credit Accounts Payable $165,000
B) Debit Work in Process Inventory $165,000; credit Raw Materials Inventory $165,000
C) Debit Raw Materials Inventory $187,000; credit Cash $187,000
D) Debit Accounts Payable $165,000; credit Raw Materials Inventory $165,000
E) Debit Accounts Payable $187,000; credit Raw Materials Inventory $187,000

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Question 2

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Portside Watercraft uses a job order costing system.During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000,of which $24,000 were indirect.Portside incurred a factory payroll cost of $95,000,of which $25,000 was indirect labor.Portside uses a predetermined overhead rate of 170% of direct labor cost. -The journal entry to record the application of factory overhead to production is:

A) Debit Work in Process Inventory $55,800; credit Factory Overhead $55,800.
B) Debit Work in Process Inventory $161,500; credit Factory Overhead $161,500.
C) Debit Work in Process Inventory $119,000; credit Factory Overhead $119,000.
D) Debit Factory Overhead $119,000; credit Work in Process Inventory $119,000.
E) Debit Work in Process Inventory $95,000; credit Factory Payroll $95,000.

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Question 3

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Adams Manufacturing allocates overhead to production on the basis of direct labor costs.At the beginning of the year,Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000.During the year Adams incurred $418,000 in materials costs,$413,200 in overhead costs and $224,000 in direct labor costs. -Compute the amount of under- or overapplied overhead for the year.

If overhead is underapplied all of the following are true except:

A time ticket is a source document used by an employee to record the number of hours worked on a particular job during the work day.

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

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

Time tickets can be used to determine the amount of direct labor to charge to jobs.

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

There should be a "cause and effect" relation between the overhead allocation base and overhead costs.

Chumley Advertising Agency contracted with a company to prepare an ad campaign.Chumley uses a job order costing system.Chumley estimates that the job will take 140 designer hours at $90 per hour and 85 staff hours at $45 per hour.Chumley uses two overhead rates in applying overhead to jobs: Designer-related at $100 per designer hour and staff-related at $50 per staff hour.Determine the total estimated cost for this job.

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

If actual overhead incurred during a period exceeds applied overhead,the difference will be a credit balance in the Factory Overhead account at the end of the period.

KL Company uses a job order costing system.During the month of July,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)Recorded the factory payroll totaling $37,700,which includes $8,200 indirect labor,to jobs and overhead. Make the necessary journal entries to record the above transactions and events.

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

Overapplied overhead should be ________ to the Cost of Goods Sold account when closed.

In a job order costing system,indirect labor costs are debited to the Factory Overhead account.

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

Franklin Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct labor cost.Franklin 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 for over- or underapplied overhead,assuming the amount is immaterial.

The direct materials section of a job cost sheet shows the materials costs assigned to a specific job,but the direct labor section only shows the total hours of labor allocated to the job.