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Exam 3: Job-Order Costing: Cost Flows and External Reporting

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Question 61

True/False

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The following entry would be used to record the transfer of $40,000 of direct material and $10,000 of indirect material from the storeroom to production:

A) True
B) False

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Question 62

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In a job-order costing system, manufacturing overhead applied is recorded as a debit to:

A) Raw Materials inventory.
B) Finished Goods inventory.
C) Work in Process inventory.
D) Cost of Goods Sold.

E) B) and C)
F) A) and C)

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Question 63

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Baab Corporation is a manufacturing firm that uses job-order costing. The company's inventory balances were as follows at the beginning and end of the year: The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 33,000 machine-hours and incur $231,000 in manufacturing overhead cost. The following transactions were recorded for the year: Raw materials were purchased, $315,000.Raw materials were requisitioned for use in production, $307,000 ($281,000 direct and $26,000 indirect).The following employee costs were incurred: direct labor, $377,000; indirect labor, $96,000; and administrative salaries, $172,000.Selling costs, $147,000.Factory utility costs, $10,000.Depreciation for the year was $127,000 of which $120,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities.Manufacturing overhead was applied to jobs. The actual level of activity for the year was 34,000 machine-hours.Sales for the year totaled $1,253,000.Required:a. Prepare a schedule of cost of goods manufactured.b. Was the overhead underapplied or overapplied? By how much?c. Prepare an income statement for the year. The company closes any underapplied or overapplied overhead to Cost of Goods Sold.

Hardigree Corporation uses a job-order costing system. The following data relate to the just completed month's operations The manufacturing overhead was:

Assume that a company closes out any manufacturing overhead overapplied or underapplied to cost of goods sold. Then in the Schedule of Cost of Goods Sold, Adjusted cost of goods sold = Unadjusted cost of goods sold + Overapplied overhead − Underapplied overhead.

On November 1, Arvelo Corporation had $32,000 of raw materials on hand. During the month, the company purchased an additional $78,000 of raw materials. During November, $95,000 of raw materials were requisitioned from the storeroom for use in production. These raw materials included both direct and indirect materials. The indirect materials totaled $3,000. Prepare journal entries to record these events. Use those journal entries to answer the following questions:The debits to the Manufacturing Overhead account as a consequence of the raw materials transactions in November total:

The Tse Manufacturing Corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. The company closes any balance in the Manufacturing Overhead account to Cost of Goods Sold. During the year the company's Finished Goods inventory account was debited for $125,000 and credited for $110,000. The ending balance in the Finished Goods inventory account was $28,000. At the end of the year, manufacturing overhead was overapplied by $4,500.If the estimated manufacturing overhead for the year was $24,000, and the applied overhead was $26,500, the actual manufacturing overhead cost for the year was:

During May, Sharpton Corporation recorded the following: Transactions: Required:Complete the following T-accounts by recording the beginning balances and each of the transactions listed above.

The following partially completed T-accounts summarize transactions for Faaberg Corporation during the year: The direct materials cost was:

The Collins Corporation uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of materials used in production. At the beginning of the most recent year, the following estimates were made as a basis for computing the predetermined overhead rate for the year: manufacturing overhead cost, $200,000; direct materials cost, $160,000. The following transactions took place during the year (all purchases and services were acquired on account): Raw materials were purchased, $86,000.Raw materials were requisitioned for use in production (all direct materials), $98,000.Utility costs were incurred in the factory, $15,000.Salaries and wages were incurred as follows:

Compute the amount of raw materials used during November if $36,500 of raw materials were purchased during the month and if the inventories were as follows:

The following partially completed T-accounts summarize transactions for Faaberg Corporation during the year: The Cost of Goods Manufactured was:

Gurtner Corporation has provided the following data concerning last month's operations. Any underapplied or overapplied manufacturing overhead is closed out to cost of goods sold. How much is the cost of goods available for sale on the Schedule of Cost of Goods Sold?

In October, Raddatz Incorporated incurred $73,000 of direct labor costs and $6,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:

Plasencia Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year: Results of operations: The net operating income is: (Do not round your intermediate calculations.)

Stangl Inc. has provided the following data for the month of September. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Manufacturing overhead for the month was underapplied by $3,100.The company allocates any underapplied or overapplied overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.Required:Determine the cost of work in process, finished goods, and cost of goods sold AFTER allocation of the underapplied or overapplied overhead for the period.

Mcie Corporation is a manufacturer that uses job-order costing. The company has supplied the following data for the just completed year: Results of operations: Required: a. What is the ending balance in Raw Materials? b. What is the ending balance in Work in Process?

Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $20,000 and the ending balance was $36,000. Raw materials purchases during the month totaled $63,000. Manufacturing overhead cost incurred during the month was $111,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for May was:

Stockman Incorporated has provided the following data for the month of November. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Manufacturing overhead for the month was overapplied by $1,000.The company allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.The journal entry to record the allocation of any underapplied or overapplied manufacturing overhead for November would include the following:

Molzahn Corporation is a manufacturer that uses job-order costing. The company closes out any overapplied or underapplied overhead to Cost of Goods Sold at the end of the year. The company has supplied the following data for the just completed year: Results of operations: Manufacturing overhead is overapplied or underapplied by: (Do not round your intermediate calculations.)