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Exam 19: Job Order Costing

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Question 101

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A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:

A) debit Work in Process Inventory, credit Raw Materials Inventory.
B) debit Work in Process Inventory, credit Cost of Goods Sold.
C) debit Work in Process Inventory, credit Factory Overhead.
D) debit Finished Goods Inventory, credit Raw Materials Inventory.
E) debit Factory Overhead, credit Raw Materials Inventory.

F) All of the above
G) D) and E)

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Question 102

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Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. -At year-end, the balance in the Factory Overhead account is a:

A) $380,000 Debit balance.
B) $360,000 Debit balance.
C) $20,000 Debit balance.
D) $20,000 Credit balance.
E) $400,000 Credit balance.

F) A) and B)
G) B) and E)

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Question 103

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Oddley Corp. uses a job order costing system. The following is selected information pertaining to costs applied to jobs during the year: Jobs still in process at the end of the year: $167,000, which includes $65,000 direct labor costs. Jobs finished and sold during the year: $395,000, which includes $172,000 direct labor costs. Jobs finished but unsold during the year: $103,000, which includes $38,000 direct labor costs. Oddley Corp.'s predetermined overhead rate is 60% of direct labor cost. At the end of the year, the company's records show that $189,000 of factory overhead has been incurred. (a) Determine the amount of overapplied or underapplied overhead. (b) Prepare the necessary journal entry to close the Factory Overhead account assuming that any remaining balance is not material.

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 issuance of materials to production is:

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 allocation of factory wages to production is:

The target cost for a job using job costing is calculated as:

At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Simply should:

Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. - The correct journal entry to record the $73,000 indirect labor for the month is:

Cost accounting systems accumulate manufacturing costs and then assign them to products and services.

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.

A company that produces a large number of standardized units would normally use a job order costing system.

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

Heintz Company's job order costing system applies overhead based on direct labor costs. The company's manufacturing costs for the current year were: direct materials, $108,000; direct labor,$144,000; and factory overhead, $36,000. At year-end, the total cost of Work in Process is$38,000, which includes $12,000 of direct labor cost. What amount of direct material cost is included in the ending Work in Process inventory?

A job cost sheet includes:

Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor. How are these costs recorded?

The predetermined overhead rate for Shilling Manufacturing is based on estimated direct labor costs of $350,000 and estimated factory overhead of $770,000. Actual costs incurred were: $\begin{array} { l | l } \text { Direct materials } & \$ 475,000 \\\hline \text { Direct labor } & 347,000 \\\hline \text { Indirect materials } & 78,000 \\\hline \text { Indirect labor } & 143,500 \\\hline \text { Sales comrrissions } & 150,000 \\\hline \text { Factory depreciation } & 260,000 \\\hline \text { Property taxes, factory } & 35,000 \\\hline \text { Factory utilities } & 65,000 \\\hline \text { Advertising } & 62,500 \\\hline \text { Factory supervision } & 185,000\end{array}$ a. Calculate the predetermined overhead rate and calculate the overhead applied during the year. b. Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.

The cost of all direct materials issued to production is debited to Work in Process Inventory.

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead application rate was:

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

If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale?