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Exam 15: Job Order Costing and Analysis

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Question 61

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

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Goods in P...

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Question 62

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Job order costing is applicable to manufacturing firms only and not service firms.

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Question 63

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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 manufacturing process.

Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

A clock card is a source document that an employee uses to report how much time was spent working on a job or on overhead 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.

Use the following information to compute the following items: (a) Calculate the cost of materials used. (b) Calculate the manufacturing costs incurred during the period. (c) Calculate the Cost of Goods Manufactured during the period. (d) Calculate the Cost of Goods Sold during the period. (e) Calculate the amount by which overhead is under- or over-applied.

Under a job order cost accounting system, individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

The Johnson Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during March of the current year. This table summarizes information provided on each sheet: (a) What is the cost of goods sold for the month of March? (b) What is the cost of the goods in process inventory on March 31? (c) What is the cost of the finished goods inventory on March 31?

Canberra Company uses a job order cost accounting system. During the current month, the factory payroll of $180,000 was paid in cash. The amount of labor classified as indirect labor was three times greater than the amount classified as indirect labor. What amount should be debited to Factory Overhead for indirect labor for this month?

A manufacturing company uses a job order cost accounting system. Overhead is applied using pounds of direct materials used as an allocation base. Total costs for a particular job were $5,720. Of this amount $2,600 was direct labor and $1,040 was direct material. The company pays $26 per hour of direct labor and $2 per pound of direct materials. What is this company's overhead rate?

Since a predetermined overhead allocation rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

Deltan Corp. allocates overhead to production on the basis of direct labor costs. If Deltan's total estimated overhead is $450,000 and estimated direct labor cost is $180,000, determine the amount of overhead to be allocated to finished goods inventory. There is $20,000 of total direct labor cost in the jobs in the finished goods inventory.

Prepare journal entries to record the following transactions and events for April using a job order cost accounting 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 (paid in cash), 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.

During last period, a company's overhead rate was 150% of direct labor cost. This caused factory overhead to be $10,000 over applied. Use the following incomplete accounts to determine the cost of goods manufactured.

PRO, Inc. had the following activities during its most recent period of operations: (a) Purchased raw materials on account for $140,000 (both direct and indirect materials are recorded in the Raw Materials Inventory account). (b) Issued raw materials to production of $130,000 (80% direct and 20% indirect). (c) Incurred and paid labor costs of $250,000 cash (70% direct and 30% indirect). (d) Incurred factory utilities costs of $20,000; this amount is still payable. (e) Applied overhead at 80% of direct labor costs. (f) Recorded factory depreciation, $22,000. Prepare journal entries to record the above transactions.

A ______________________ accounting system records manufacturing activities using a periodic inventory system. A ____________________ accounting system records manufacturing activities using a perpetual inventory system.

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

Medlar Corp. maintains a Web-based general ledger. Overhead is applied on the basis of direct labor costs. Its bookkeeper accidentally deleted most of the entries that had been recorded for January. A printout of the general ledger (in T-account form) showed the following: A review of the prior year's financial statements, the current year's budget, and January's source documents produced the following information: (1) Accounts Payable are used for raw material purchases only. January purchases were $49,000. (2) Factory overhead costs for January were $17,000 none of which is indirect materials. (3) The January 1 balance for finished goods inventory was $10,000. (4) There was a single job in process at January 31 with a cost of $2,000 for direct materials and $1,500 for direct labor. (5) Total cost of goods manufactured for January was $90,000. (6) All direct laborers earn the same rate ($13/hour). During January, 2,500 direct labor hours were worked. (7) The predetermined overhead allocation rate is based on direct labor costs. Budgeted (expected) overhead for the year is $195,000 and budgeted (expected) direct labor is $390,000. Write in the missing amounts a through o above in the T-accounts above.

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?

Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead allocation rate exceeds the overhead incurred during a period.