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Exam 19: Job Order Costing

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Question 91

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A job cost sheet is useful for developing financial accounting numbers but does not contain information that is useful for managing the production process.

A) True
B) False

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Question 92

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A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

A) Factory Overhead Ledger.
B) Payroll Register.
C) Time ticket.
D) General Ledger.
E) Factory payroll record.

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

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Question 93

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

Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.

Describe the flow of the employee labor, both direct and indirect, through the inventory accounts.

Lowden Company has an overhead application rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $50,000 and direct materials used cost $80,000. Determine the amount of overhead Lowden Company should record in the current period.

Describe the flow of labor costs in a job order costing system, and identify the documents used in the system.

Prepare journal entries to record the following transactions and events for April using a job order costing system. (a) Purchased raw materials on credit, $69,000. (b) Raw materials requisitioned: $26,000 direct and $5,400 indirect. (c) Factory payroll totaled $46,000, including $9,500 indirect labor. (d) Paid other actual overhead costs totaling $14,500 cash. (e) Applied overhead totaling $28,200. (f) Finished and transferred jobs totaling $77,500. (g) Jobs costing $58,800 were sold on credit for $103,000.

The Luna Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during September of the current year. This table summarizes information provided on each sheet: $\begin{array} { | l | l | l | } \hline \text { Number } & \text { Total Cost Incurred } & \text { Status of Job } \\\hline 951 & \$ 4,200 & \text { Finithed and delivered } \\\hline 952 & \$ 7,700 & \text { Unfini shed } \\\hline 953 & \$ 9,300 & \text { Finished and unsold } \\\hline 954 & \$ 11,100 & \text { Finished and delivered } \\\hline 955 & \$ 3,000 & \text { Finished and unsold } \\\hline 956 & \$ 5,500 & \text { Finished and delivered } \\\hline 957 & \$ 35,000 & \text { Unfini shed } \\\hline 958 & \$ 3,200 & \text { Finished and delivered } \\\hline 959 & \$ 500 & \text { Unfini shed } \\\hline 960 & \$ 22,110 & \text { Unfini shed } \\\hline 961 & \$ 7,200 & \text { Finished and delivered } \\\hline 962 & \$ 8,500 & \text { Unfini shed } \\\hline 963 & \$ 11,200 & \text { Finithed and unsold }\end{array}$ (a) What is the cost of the Work in Process inventory on September 30? (b) What is the cost of the finished goods inventory on September 30? (c) What is the cost of goods sold for the month of September?

Predetermined overhead rates are calculated at the end of the accounting period once the actual amount of factory overhead is known.

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate?

A company's predetermined overhead rate is applied at 150% of direct materials cost. How much overhead would be allocated to Job No. 325 if the total direct materials costs was $40,000?

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 direct labor for the month is:

When time ticket information is entered into the accounting system, the journal entry is a debit to Factory Wages Payable and a credit to Work in Process Inventory.

Describe how materials flow through a job order costing system, and identify the key documents in the system.

Explain how a service firm, such as an advertising agency, might use job order costing.

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

If actual overhead incurred during a period exceeds applied overhead, the difference will be a debit balance in the Factory Overhead account at the end of the period.

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. - What is the amount of job costs added to Work in Process Inventory during October?

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) :