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Exam 19: Job Order Costing

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Question 51

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Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. - At year-end, the balance in the Factory Overhead account is a:

A) $330,000 Debit balance.
B) $340,000 Credit balance.
C) $10,000 Debit balance.
D) $10,000 Credit balance.
E) $170,000 Debit balance.

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Question 52

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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.

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Question 53

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Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll 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 issuance of materials to production is:

A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

Match the following terms to the appropriate definition. A. Cost accounting system B. Time ticket C. Finished Goods Inventory D. Materials requisition E. Underapplied overhead F. Work in Process Inventory G. Overapplied overhead H. Job cost sheet I. Job order costing system J. Predetermined overhead rate K. Materials ledger card ________ 1. The production of products in response to special orders; also called customized production. ________ 2. Records manufacturing activities using a perpetual inventory system. ________ 3. The amount by which the overhead applied to jobs in a period with the predetermined overhead rate exceeds the actual overhead incurred in a period. ________ 4. An asset account where costs are accumulated while jobs are being produced. 5. The rate established prior to the beginning of a period that relates estimated overhead to an allocation factor such as estimated direct labor and is used to assign overhead cost to a job. _ 6. An asset account where costs of completed jobs reside until the jobs are delivered to customers. ________ 7. A source document that production managers use to request materials needed for manufacturing and that is used to assign materials costs to specific jobs or to overhead. 8. A perpetual record that is updated each time units of raw material are purchased and issued for use in production. ________ 9. A source document that is used to report how much time an employee spent working on a job or on overhead activities and the labor costs to assign to jobs or overhead. _______10. The amount by which actual overhead incurred in a period exceeds the overhead applied to jobs with the predetermined overhead rate. 11. A separate record maintained for each job in a job order costing system; it shows the costs of direct materials, direct labor, and overhead for each job.

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 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 receiving report serves as the source document for recording materials received in both a materials ledger card and in the general ledger.

At the end of June, the job cost sheets for Kennedy Manufacturing show the following total costs accumulated on three custom jobs. $\begin{array} { | l | l | l | l | } \hline & \text { Job 203 } & \text { Job 204 } & \text { Job 205 } \\\hline \text { Direct materials } & \$ 32,000 & \$ 47,000 & \$ 43,000 \\\hline \text { Direct labor } & 18,000 & 22,000 & 25,000 \\\hline \text { Overhead } & 26,100 & 31,900 & 36,250 \\\hline\end{array}$ 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 cost of the raw materials requisitioned in June for each of the three jobs? b. How much direct labor cost is incurred during June for each of the three jobs? c. What predetermined overhead rate is used during June? d. How much total cost is transferred to finished goods during June?

Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. -The journal entry to record the application of factory overhead to production is:

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

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

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.

Since a predetermined overhead rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

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

There are two basic types of cost accounting systems: job order costing and periodic costing.

If overhead is overapplied, it means that individual jobs have not been charged enough overhead during the year and the cost of goods sold reported is too low.

Marshall Enterprises charged the following amounts of overhead to jobs during the year: $20,000 to jobs still in process, $60,000 to jobs completed but not sold, and $120,000 to jobs finished and sold. At year-end, Marshall Enterprise's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should Marshall make at year-end?

Cost accounting systems used by manufacturing companies are based on the:

Explain what a predetermined overhead rate is, how it is calculated, and why it is used.

A company's overhead rate is 200% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.