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Exam 2: Job Order Costing and Analysis

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Question 51

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A company's file of job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

A) True
B) False

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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.

A) True
B) False

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Question 53

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Taylor Corp. uses a job order costing system and worked only on Job 101 during the current period. Job 101 was sold for $460,000. The following information pertains to costs incurred for Job 101. $\begin{array} { |l | l |} \hline\text { Direct Materials } & \$ 90,000 \\\hline \text { Indirect Materials } & \$ 30,000 \\\hline \text { Direct Labor } & \$ 130,000 \\\hline \text { Indirect Labor } & \$ 75,000 \\\hline \text { Depreciation of Machinery } & \$ 10,000 \\\hline \text { Factory Supplies } & \$ 8,000 \\\hline \text { Overhead Application Rate } & 90 \% \text { of direct labor } \\\hline\end{array}$ After adjusting for the amount of over or underapplied overhead, determine the amount of gross profit earned on Job 101.

Features of a job costing system include all but which of the following:

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

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

A job order costing system would be appropriate for a manufacturer of automobile tires.

The collection of job cost sheets for all jobs in process makes up the subsidiary ledger controlled by the ________ Inventory.

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 overhead application rate.

The production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of labor costs. What is the gross profit per unit on its sale?

Drop Anchor takes special orders to manufacture sail boats for high end customers. Complete the job cost sheets for Drop Anchor for September based on the following information. Prepare journal entries to record the transactions as well as post to the job cost sheets. a. Purchased raw materials on credit, $145,000. b. Materials requisitions: Job 240, $48,000; Job 241, $36,000; Job 242, $42,000; indirect materials were $12,000. c. Time tickets used to charge labor to jobs: Job 240, $40,000; Job 241, $30,000; Job 242, $35,000, indirect labor is $25,000. d. The company incurred the following additional overhead costs: depreciation of factory building, $70,000; depreciation of factory equipment, $60,000; expired factory insurance, $10,000; utilities and maintenance cost of $20,000 were paid in cash. e. Applied overhead to all three jobs. The predetermined overhead rate is 190% of direct labor cost. f. Transferred jobs 240 and 242 to Finished Goods Inventory. g. Sold job 240 for $300,000 for cash. h. Closed the under- or over-applied overhead account balance.

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

The journal entry to record the purchase of materials includes a debit to Work in Process Inventory.

A type of production that yields customized products or services for each customer is called:

A company that uses a job order costing system incurred $10,000 of factory payroll during May. Present the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

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 of direct materials and $13,000 of indirect materials. What amount will Andrew debit to Work in Process Inventory for the month of March?

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

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 application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

A company that makes which of the following types of products would best be suited for a job costing system?