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Exam 19: Job Order Cost Accounting

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Question 1

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Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?

A) $31,600.
B) $58,000.
C) $56,000.
D) $60,000.
E) $86,400.

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Question 2

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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.

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The Johnson Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during March of the current year. This table summarizes information provided on each sheet: (a) What is the cost of goods sold for the month of March? (b) What is the cost of the goods in process inventory on March 31? (c) What is the cost of the finished goods inventory on March 31?

Describe the use of the Factory Payroll account in a job order cost accounting system.

Selwyn's Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200. (a) Prepare a journal entry to remove this difference assuming that it is not material. (b) Instead, assume actual overhead incurred was only $24,000. Describe (without computations) the alternative procedure that Selwyn might use to record this material difference.

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

Job order production systems would be appropriate for companies that produce compact disks or disposable cameras.

The job order cost sheets used by Garza Company revealed the following: Job No. 125 was completed during May and Jobs No. 124 and 125 were shipped to customers in May. What was the company's cost of goods sold for May and the goods in process inventory on May 31?

Minchoy Corporation uses a job order cost accounting system. Five jobs were worked on during the current year. The predetermined overhead rate is 20% of direct labor costs. The following cost information is available (all materials and time ticket information applies to direct costs): Part 1-Complete the job cost sheets for each job. Part 2-Identify the amounts of each of the following accounts at the end of the period a. Work in Process _____________________ b. Finished Goods _____________________ c. Cost of Goods Sold _____________________

The cost of all materials issued to production are debited to Goods in Process Inventory.

A perpetual record of a raw materials item that records data on the quantity and cost of units purchased, units issued for use in production, and units that remain in the raw materials inventory, is called a(n) :

Samer Corp. uses a job order cost accounting system. The following is selected information pertaining to costs applied to jobs during the year:

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

Labor costs in production can be:

Penn Company uses a job order cost accounting system. In the last month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. These costs were accumulated in Factory Payroll as they were paid. Which entry should Penn make to assign the Factory Payroll?

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.

When factory payroll for indirect labor is assigned, __________________ is debited.

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

Docksider Boats uses a job order cost accounting system. During one month Docksider purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Docksider incurred a factory payroll of $95,000, paid in cash, of which $25,000 is classified as indirect labor. Docksider uses a predetermined overhead application rate of 170% of direct labor cost. The journal entry to record the issuance of materials to production is:

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