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Exam 19: Job Order Costing

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Question 71

True/False

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

A) True
B) False

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Question 72

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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 total manufacturing costs added during the period are:

A) $470,000.
B) $540,000.
C) $440,000.
D) $570,000.
E) $500,000.

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

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Question 73

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The Merker Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during April of the current year. This table summarizes information provided on each sheet: $\begin{array} { l | l | l } \text { Number } & \text { Total Cost Incurred } & \underline { \text { Status of Job } } \\\hline 544 & \$ 15,050 & \begin{array} { l } \text { Finished and } \\\text { delivered }\end{array} \\\hline 545 & \$ 22,400 & \begin{array} { l } \text { Finished and } \\\text { delivered }\end{array} \\\hline \hline 546 & \$ 7,500 & \text { Finished and unsold } \\\hline 547 & \$ 4,300 & \begin{array} { l } \text { Finished and } \\\text { delivered }\end{array} \\\hline 548 & \$ 33,000 & \text { Unfinished } \\\hline 549 & \$ 62,000 & \text { Finished and unsold } \\\hline 550 & \$ 14,600 & \text { Unfinished } \\\hline 551 & \$ 22,200 & \begin{array} { l } \text { Finished and } \\\text { delivered }\end{array} \\\hline 552 & \$ 3,600 & \text { Finished and unsold } \\\hline 553 & \$ 1,000 & \text { Unfinished }\end{array}$ (a) What is the cost of goods sold for the month of April? (b) What is the cost of the Work in Process inventory on April 30? (c) What is the cost of the finished goods inventory on April 30?

Selected information from the budget of the Singh Corp. at the beginning of the year follows: $\begin{array}{l}\begin{array} { l r } \text { Estimated factory overhead } & \$ 132,000 \\\text { Estimated direct labor hours } & 55,000 \text { hours } \\\text { Estimated machine hours......... } & 41,250 \text { hours } \\\text { Estimated direct labor cost } & \$ 825,000 \\\text { Actual factory overhead } & \$ 144,000\end{array}\\\text { incurred during the year }\end{array}$ Calculate the predetermined overhead rate if the company uses the following as a basis: (a) Direct labor hours. (b) Direct labor cost. (c) Machine hours.

What is a cost accounting system? What are the two basic types of cost accounting systems?

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,200 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $1,400 and direct labor cost of $800. Therefore, the amount of the applied overhead is:

Service firms, unlike manufacturing firms, should only use actual costs when determining a selling price for their services.

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, Factory Overhead account is:

A time ticket is a source document that an employee uses to report how much direct labor was performed for a job and is used to determine the amount of direct labor to charge to the job.

A time ticket is a source document used by an employee to record the total number of hours worked and serves as a source document for entries to record labor costs.

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory. The cost of units transferred to finished goods is:

Describe the flow of the raw materials, both direct and indirect, through the inventory accounts from purchase to use.

Job order production systems would be appropriate for companies that produce custom homes, specialized equipment, and special computer systems.

A job order production system would be appropriate for a company that produces which one of the following items?

Job cost sheets include both product and period costs.

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

A materials requisition is a source document used by materials managers of a manufacturing company to order raw materials from suppliers; it serves the same purpose as a purchase order in a merchandising company.

The predetermined overhead rate is used to allocate overhead cost to jobs.

If overhead is overapplied, it means that individual jobs have been charged too much overhead during the year and the cost of goods sold reported is too high.

When factory payroll is assigned to specific jobs, ________ is debited.