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Chapter 5–Product and Service Costing: Job-Order System
Student: ___________________________________________________________________________
1. A production process may yield a tangible product or a service and their unique characteristics determine the best approach for developing a cost management system.
True False
2. Manufacturing firms produce intangible products that cannot be inventoried.
True False
3. Service firms produce intangible products that are not separable from the customer.
True False
4. Heterogeneity means that services cannot be inventoried and must be consumed when performed.
True False
5. Inseparability means that production and consumption are inseparable for services.
True False
6. The uniqueness of the products or units for cost accounting purposes relates to their common costs.
True False
7. Cost accumulation is the determination of the dollar amounts of direct materials, direct labor and overhead costs, and cost measurement is the recognition and recording of costs.
True False
8. cost assignment is the assignment of costs to products or services once the costs have been accumulated and measured.
True False
9. Unit cost is a critical piece of information for a manufacturing business as well as a service company.
True False
10. Activity level is the average activity usage over the long term and normal activity level is the production level for one year.
True False
11. Companies operating in job-order industries produce a wide variety of products or jobs that are quite different from each other.
True False
12. The job-order cost sheet accumulates the cost of all the jobs produced.
True False
13. The collection of all job-order cost sheets defines a work-in-process inventory file.
True False
14. The source document known as a time ticket assigns the direct overhead to each particular job.
True False
15. A job-order costing process would be applicable for to airplane manufacturer.
True False
16. Cost flow follows costs from the point they are incurred to the point they are recognized as an expense on the income statement.
True False
17. When materials are purchased, the costs of the materials “flows” into the materials inventory account.
True False
18. In a job-order costing system, direct labor costs assigned to a job are different than the costs assigned to work-in-process inventory.
True False
19. In a job-order costing system, actual overhead costs never enter the work-in-process inventory accounts
True False
20. The costs of a completed job are transferred from the work-in-process inventory account to the finished goods inventory account.
True False
21. A debit balance in overhead control implies that actual overhead costs exceed overhead applied.
True False
22. In job-order costing, departmental overhead rates and activity-based costing affect only the application of overhead.
True False
23. In an activity-based costing system activity cost is applied to each job by multiplying productivity rate by the job’s use of the associated driver.
True False
24. Costs of normal spoilage are included in overhead and applied to all good units produced.
True False
25. Abnormal spoilage is charged to the job that caused it.
True False
26. In __________ a single product is produced on a continuous basis.
________________________________________
27. A __________ service organization does not use raw material or tangible items for the customer.
________________________________________
28. __________ means that services cannot be inventoried but must be consumed when performed.
________________________________________
29. __________ is the recognition and recording of costs.
________________________________________
30. Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves __________ .
________________________________________
31. The association of production costs with the units produced is called __________ .
________________________________________
32. The __________ activity level is the production level a firm expects to attain for the coming year.
________________________________________
33. The __________ costing system assigns costs by the job.
________________________________________
34. The __________ form indicates the type and quantity of each material issued to the factory.
________________________________________
35. A __________ inventory file is a file of job-order cost sheets.
________________________________________
36. The actual __________ costs are not included on a job-order sheet.
________________________________________
37. Purchases of direct materials are recorded as a debit to the __________ account.
________________________________________
38. The entry that captures the flow of material from the storeroom to work-in-process is called
the __________ inventory account.
________________________________________
39. __________ are the source of information for posting the labor cost flows.
________________________________________
40. The total applied overhead at a given point in time is given by the credit balance in the __________ control account.
________________________________________
41. When a job is completed the total costs are transferred to a __________ inventory file.
________________________________________
42. When a job is shipped to a customer, the finished job cost becomes the cost of the __________ sold.
________________________________________
43. In job-order costing, departmental overhead rates and activity-based costing affect only the application of __________ .
________________________________________
44. The defective units expected due to the nature of the typical production process are called __________ .
________________________________________
45. The defective units due to the exacting nature of a particular job is called __________ .
________________________________________
46. Which of the following is a manufactured product?
A. bungee jumping
B. beauty salon
C. automobile
D. restaurant
47. Manufacturers producing unique or customized products would employ a(n)
A. process costing system.
B. job-costing system.
C. homogeneous costing system.
D. all of the above.
48. Which of the following is a pure service?
A. bungee jumping
B. beauty salon
C. restaurant
D. software
49. A pure service organization has
A. no raw materials, no inventories, and a definite separation between the plant and the customer.
B. raw materials, tangible items, and no separation between the plant and the customer.
C. no raw materials, no tangible items, and no separation between the plant and the customer.
D. none of these.
50. Inseparability refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
51. Heterogeneity refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
52. Intangibility refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
53. Perishability refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
54. Which of the following firms would make extensive use of service costing?
A. Law firm
B. furniture manufacturer
C. auto dealer
D. auto manufacturer
55. Which of the following products would NOT use job-order costing?
A. houses
B. chemicals
C. ships
D. custom-built furniture
56. Which of the following firms would make extensive use of a job-order costing?
A. dental and medical services
B. canned foods
C. discount brokers
D. petroleum
57. Process costing would be most applicable for
A. custom machining.
B. an electronics producer.
C. high rise building construction.
D. CPA audits.
58. Which of the following would NOT use a process costing system?
A. electrical wire
B. cotton yarn
C. newsprint
D. satellites
59. Homogeneous products refer to
A. products similar in nature.
B. the nonphysical nature of services and opposed to products.
C. great variation in the nature products.
D. products that can be inventoried.
60. Which cost accounting process would be most appropriate for accumulating costs of identical, standardized units?
A. job-order costing
B. process costing
C. normal costing
D. standard costing
61. The process where a single product is produced on a continuous basis is called:
A. process production
B. job-order production
C. job production
D. both a and c
62. A source document
A. is only an external document.
B. provides transaction data that can be recorded in a database.
C. is only used to record a transaction between an organization and an outside vendor.
D. is only an internal document.
63. Which of the following costs is usually NOT easily traceable to finished units of product?
A. direct labor
B. direct materials
C. manufacturing overhead
D. all of the above
64. Manufacturing overhead consists of all
A. costs other than direct materials.
B. manufacturing costs other than direct materials.
C. costs other than direct materials and direct labor.
D. manufacturing costs other than direct materials and direct labor.
65. The recognition and recording of costs is called:
A. Cost assignment
B. Cost measurement
C. Cost accumulation
D. Job order costing
66. Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves:
A. Job order costing
B. Cost accumulation
C. Cost assignment
D. Cost measurement
67. An actual overhead rate can be calculated
A. at the beginning of the year.
B. at the end of each month.
C. at the beginning of each month.
D. either at the beginning of the year or at the beginning of the month.
68. Disadvantages of actual costing include
A. actual cost systems cannot provide accurate unit cost information on a timely basis.
B. actual cost systems produce unit costs that fluctuate from period to period.
C. estimates must be used when calculating the actual overhead rate.
D. both a and b.
69. The effect of uniform production levels on unit production costs can be achieved
A. by using a factory overhead rate based on long-run normal production activity level.
B. by using a factory overhead rate based on selling price.
C. by closing the factory overhead at the end of the accounting period.
D. by using a factory overhead rate based on different production levels for each year.
70. Normal costing uses which cost in work in process?
A. applied direct materials
B. actual overhead
C. applied overhead
D. budgeted overhead
71. A normal costing system records which costs in work in process?
A. actual direct materials, actual direct labor, actual manufacturing overhead
B. applied direct materials, applied direct labor, applied manufacturing overhead
C. applied materials and labor and actual manufacturing overhead
D. actual materials and labor and applied manufacturing overhead
72. The predetermined overhead rate is usually calculated at the
A. end of each month.
B. beginning of each month.
C. beginning of the year.
D. end of the year.
73. Which of the following costing systems assigns actual costs of materials to inventory?
A. actual costing system
B. normal costing system
C. standard costing system
D. both a and b
74. The principal difficulty with normal costing is that
A. the unit cost information is not received on a timely basis.
B. it can result in fluctuating per-unit overhead costs.
C. estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in underapplied or overapplied overhead.
D. there is no difficulty associated with using normal costing.
75. Unit cost information is needed for
A. costing inventory.
B. financial reporting requirements.
C. decision making.
D. all of the above.
76. The association of production costs with the units produced is called:
A. Job-order costing
B. Cost assignment
C. Cost measurement
D. Cost accumulation
77. The production level the firm expects to attain for the coming year is called:
A. Practical activity level
B. Normal activity level
C. Theoretical activity level
D. Expected activity level
78. Unit costs are critical for
A. valuing inventory.
B. determining net income.
C. decisions to enter a new product line.
D. all of the above.
79. In developing unit costs, overhead costs should be assigned using activity drivers. Which would be the likely activity driver for a production process using a lathe?
A. units produced
B. direct labor hours
C. machine hours
D. direct materials cost
80. Unit cost is important information for which of the following?
A. valuing inventory
B. determining income
C. decision making
D. all of the above
81. The average activity that a firm experiences in the long term (more than one year) is called:
A. Expected activity level
B. Normal activity level
C. Theoretical activity level
D. Practical activity level
82. The absolute maximum production activity of a manufacturing firm is called:
A. Expected activity level
B. Normal activity level
C. Theoretical activity level
D. Practical activity level
83. The maximum output that can be realized if everything operates efficiently is referred to as:
A. Expected activity level
B. Normal activity level
C. Theoretical activity level
D. Practical activity level
84. The system which assign(s) costs by the job is termed:
A. The process costing system
B. The job-order costing system
C. The project costing system
D. Both a and c
85. A job-order costing process would be most applicable for
A. a food processing plant.
B. natural gas processing.
C. airplane manufacturing.
D. fertilizer production.
86. The document which indicates the type and quantity of each material issued to the factory is called the:
A. control account
B. materials requisition form
C. production list
D. work ticket
87. The collection of all job cost sheets defines a
A. materials file.
B. finished goods file.
C. cost of goods file.
D. work-in-process file.
88. The document that identifies each job and accumulates its manufacturing costs is called:
A. job-order cost sheet
B. control account
C. production order
D. bill of materials
89. Which of the following items is a basic costing system record in a job-order costing system?
A. materials requisition form
B. job-order cost sheet
C. job time ticket
D. all of the above
90. The cost of direct materials is assigned to a job by the use of a source document known as a
A. job cost sheet.
B. control account.
C. materials requisition form.
D. production order.
91. A work-in-process inventory file is
A. a file of electronic job-order cost sheets.
B. a file cabinet where work tickets are stored.
C. a file of electronic materials requisitions.
D. none of these.
92. Direct labor costs are assigned to individual jobs using a source document known as a
A. job-order cost sheet.
B. payroll check.
C. time sheet.
D. requisition form.
93. Figure 5 – 1
The Nautical Corporation manufactures custom-made wood wall units. The following data pertains to Job X4A:
| Direct materials placed into production | $9,000 |
| Direct labor hours worked | 300 hours |
| Direct labor rate per hour | $15 |
| Machine hours worked | 100 hours |
Factory overhead rate is $22.50 per machine hour. Job X4A consists of 500 units.
Refer to Figure 5-1. One-half of Job X4A was sold for $10,000. What is the total amount of costs assigned to Job X4A?
A. $20,250
B. $15,750
C. $13,500
D. $9,000
94. Figure 5 – 1
The Nautical Corporation manufactures custom-made wood wall units. The following data pertains to Job X4A:
| Direct materials placed into production | $9,000 |
| Direct labor hours worked | 300 hours |
| Direct labor rate per hour | $15 |
| Machine hours worked | 100 hours |
Factory overhead rate is $22.50 per machine hour. Job X4A consists of 500 units.
Refer to Figure 5-1. One-half of Job X4A was sold for $10,000. What is the cost per unit for Job X4A?
A. $18
B. $31.50
C. $27
D. $40.50
95. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is overhead cost assigned to Job XY5?
A. $200
B. $400
C. $750
D. $1,500
96. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is the materials cost per unit for Job XY5?
A. $267
B. $80
C. $40
D. $4
97. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is the labor cost per unit for Job XY5?
A. $4
B. $15
C. $0.80
D. $40
98. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What the total cost assigned to Job XY5?
A. $5,1500
B. $4,400
C. $4,200
D. $4,950
99. Which of the following costs is NOT included on a job-order cost sheet?
A. direct material costs
B. applied factory overhead costs
C. direct labor costs
D. actual factory overhead costs
100. A debit to Materials Inventory indicates materials were
A. ordered.
B. requisitioned.
C. put into production.
D. purchased.
101. Figure 5 – 3
Robinson Corporation constructs new homes. Assume that Robinson uses a job costing system. During July 2014, the following transactions occurred:
Robinson purchased $4,500 of lumber on account.
Robinson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash.
Refer to Figure 5-3. The journal entry to record the requisition of lumber for Robinson would include a
A. debit to Work-in-Process of $4,500.
B. debit to Materials Inventory of $3,750.
C. credit to Finished Goods of $3,750.
D. debit to Work-in-Process of $3,750.
102. Figure 5 – 3
Robinson Corporation constructs new homes. Assume that Robinson uses a job costing system. During July 2014, the following transactions occurred:
Robinson purchased $4,500 of lumber on account.
Robinson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash.
Refer to Figure 5-3. The journal entry to record labor for Robinson would include a
A. debit to Finished Goods of $750.
B. debit to Wages Payable of $750.
C. credit to Finished Goods of $750.
D. debit to Work-in-Process of $750.
103. Figure 5 – 4
Lanyard Company uses a job-order costing system to account for product costs. The following information pertains to 2014:
| Materials placed into production | $140,000 |
| Indirect labor | 40,000 |
| Direct labor (10,000 hours) | 160,000 |
| Depreciation of factory building | 60,000 |
| Other factory overhead | 100,000 |
| Increase in work-in-process inventory | 30,000 |
Factory overhead rate is $18 per direct labor hour.
Refer to Figure 5-4. What is the total amount credited to Materials Inventory for Lanyard in 2014?
A. $480,000
B. $170,000
C. $140,000
D. $110,000
104. Figure 5 – 4
Lanyard Company uses a job-order costing system to account for product costs. The following information pertains to 2014:
| Materials placed into production | $140,000 |
| Indirect labor | 40,000 |
| Direct labor (10,000 hours) | 160,000 |
| Depreciation of factory building | 60,000 |
| Other factory overhead | 100,000 |
| Increase in work-in-process inventory | 30,000 |
Factory overhead rate is $18 per direct labor hour.
Refer to Figure 5-4. What is the total amount debited to Finished Goods Inventory in 2011?
A. $490,000
B. $510,000
C. $450,000
D. $550,000
105. A journal entry debiting Work-in-Process would normally NOT be accompanied by a credit to
A. Materials Inventory.
B. Finished Goods.
C. Overhead Control.
D. Wages Payable.
106. If there is a debit balance in overhead control, that implies
A. applied overhead exceeds actual overhead.
B. actual overhead costs exceed overhead applied. a
C. actual overhead has not been closed to cost of goods sold.
D. none of the above.
107. For a manufacturer, the three inventory accounts on the balance sheet are
A. Materials, Finished Goods, and Cost of Goods Sold.
B. Materials, Overhead, and Cost of Goods Sold.
C. Materials, Direct Labor, and Overhead.
D. Materials, Work-in-Process, and Finished Goods.
108. In a traditional enterprise, the flow of costs through the system is
A. materials inventory, work-in-process inventory, finished goods inventory, cost of goods sold.
B. materials inventory, work-in-process inventory, cost of goods sold, finished goods inventory.
C. work-in-process inventory, materials inventory, finished goods inventory, cost of goods sold.
D. work-in-process inventory, materials inventory, finished goods.
109. When normal costing is used, actual overhead costs are
A. recorded in the work-in-process account.
B. recorded in the overhead control account.
C. recorded in the finished goods account.
D. not recorded.
110. Collossal Company uses a predetermined rate to apply overhead. At the beginning of the year, Collossal estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000.
If the predetermined overhead rate is based on machine hours, what is the total amount credited to the factory overhead account for the year for Collossal?
A. $249,280
B. $246,000
C. $240,000
D. $264,000
111. On March 9, 2014, Job XX4 was completed. The job cost sheet showed a total of $6,000 in direct materials and $8,000 in direct labor at a rate of $20 per direct labor hour. Factory overhead is applied at $30 per direct labor hour. The debit to Finished Goods Inventory to record the completion of Job XX4 is
A. $17,000.
B. $11,000.
C. $6,000.
D. $26,000.
112. Figure 5-5
Tonneau Corporation had the following information available for October 2014:
| Work in Process, October 1 | $20,000 |
| Materials placed into production, October | 27,500 |
| Direct labor, October | 37,500 |
Factory overhead rate is 150 percent of direct labor costs.
Job cost sheets had the following balances:
| Job Z1 | $32,500 |
| Job Z2 | 55,000 |
| Job Z3 | 35,000 |
| Job Z4 | 18,750 |
Jobs Z3 and Z4 were not completed at the end of December.
Refer to Figure 5-5. What is the balance in Work-in-Process for Tonneau at the end of October?
A. $85,000
B. $87,500
C. $56,250
D. $53,750
113. Figure 5-5
Tonneau Corporation had the following information available for October 2014:
| Work in Process, October 1 | $20,000 |
| Materials placed into production, October | 27,500 |
| Direct labor, October | 37,500 |
Factory overhead rate is 150 percent of direct labor costs.
Job cost sheets had the following balances:
| Job Z1 | $32,500 |
| Job Z2 | 55,000 |
| Job Z3 | 35,000 |
| Job Z4 | 18,750 |
Jobs Z3 and Z4 were not completed at the end of December.
Refer to Figure 5-5. What is the cost of goods finished during October for Tonneau Corporation?
A. $85,000
B. $87,500
C. $56,250
D. $53,750
114. Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month:
Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month, Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Refer to Figure 5-6. What is the cost of goods sold for the month?
A. $10,730
B. $10,850
C. $12,575
D. none of these
115. Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month:
Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month, Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Refer to Figure 5-6. What is the ending work-in-process inventory for the month?
A. $10,730
B. $4,250
C. $12,575
D. none of these
116. Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month:
Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month, Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Refer to Figure 5-6. What is the cost of goods manufactured for the month?
A. $10,730
B. $10,850
C. $12,575
D. none of these
117. Canmore Company has the following data pertaining to 2014:
| Beginning materials inventory | $ 50,000 |
| Beginning work-in-process inventory | -0- |
| Beginning finished goods inventory | -0- |
| Materials placed into production | 125,000 |
| Materials purchased on account | 137,500 |
| Direct labor incurred (10,000 hours) | 62,500 |
| Cost of goods completed (Job BB8) | 25,000 |
Factory overhead rate is 125 percent of direct labor costs.
What is the ending materials inventory balance for Canmore in 2014?
A. $50,000
B. $62,500
C. $12,500
D. $37,500
118. Samuelson Company has the following selected debit balance accounts at the end of the current year: Work-in-Process, $25,000; Finished Goods, $12,500; Cost of Goods Sold, $37,500; and Factory Overhead, $6,000. The pro-rated amount charged to Cost of Goods Sold for factory overhead will be
A. $25,000.
B. $3,000.
C. $37,500.
D. $6,000.
119. Under normal costing, which of the following statements is true regarding factory overhead?
A. The balance in factory overhead at the end of the accounting period is closed.
B. Different overhead rates are used for different quantities of predicted activity.
C. The balance in factory overhead at the end of the accounting period is kept open.
D. The immaterial balance in factory overhead at the end of the accounting period is allocated to the cost of goods sold and inventory accounts.
120. Total manufacturing-related costs incurred for Anhauser Company in August for all jobs is as follows:
| Direct materials | $ 900 |
| Insurance-factory building | 150 |
| Direct labor | 1,200 |
| Property taxes-factory building | 400 |
| Other factory overhead costs | 1,450 |
| Factory overhead applied | 1,650 |
Assuming Anhauser uses a normal costing system and applies overhead based on a predetermined rate, what is the credit to Overhead Control to close the account at the end of the year?
A. $900
B. $350
C. $1,450
D. $1,650
121. Which of the following transactions in a job-order costing system requires the procedure of merely moving a job-order cost sheet from one file to another?
A. applying factory overhead to jobs
B. closing overapplied factory overhead
C. delivering a completed job to a customer
D. moving the job from one production department to another
122. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. What is the plantwide overhead rate based on direct labor hours?
A. $1.00
B. $1.50
C. $3.00
D. $9.00
123. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. Using the plantwide overhead rate based on direct labor hours what is the cost of Job 4X5?
A. $1,250
B. $2,000
C. $8,750
D. $31,250
124. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. What is the overhead rate for the Finishing Department based on machine hours?
A. $9.00
B. $3.00
C. $2.25
D. $1.00
125. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. Based on departmental overhead rates, what is the cost of Job 4X5? Departmental overhead rates for the Assembly Department are based on direct labor hours, while departmental overhead rates for the Finishing Department are based on machine hours.
A. $31,250
B. $8,750
C. $2,000
D. $1,250
126. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. What are the total overhead costs assigned to Job 4X5, assuming the Assembly and Finishing Departments use direct labor hours and machine hours for their bases, respectively?
A. $62.50
B. $250.00
C. $750.00
D. $1,500.00
127. In a job-order costing system, if costs are incurred to rework a job due to inadequate training of personnel, these costs would be
A. debited to the job.
B. debited to manufacturing overhead control.
C. credited to manufacturing overhead control.
D. credited to the cost of goods sold.
128. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. What is the activity rate for purchasing?
A. $ 1.25
B. $ 8
C. $ 3.75
D. $ 40
129. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. What is the cost of job 102?
A. $ 86,440
B. $ 127,210
C. $ 117,170
D. none of the above
130. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. What is the cost of goods manufactured?
A. $ 144,400
B. $ 215,670
C. $ 178,340
D. $ 249,610
131. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. The ending work in process would consist of the costs of what jobs?
A. Job 102 + Job 103
B. Job 101 + Job 104
C. Job 101 + Job 102 + Job 103 + Job 104
D. Job 101 + Job 102 + Job 103
132. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. The cost of goods sold would consist of the costs of what jobs?
A. Job 102 + Job 103
B. Job 101 + Job 104
C. Job 101 + Job 102 + Job 103 + Job 104
D. Job 101 + Job 102 + Job 103
133. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the spoilage was considered normal, what is the cost of job 492?
A. $5,500
B. $5,640
C. $5,760
D. $3,000
134. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered normal spoilage, what is the journal entry for overhead control?
A. no journal entry is needed
B. materials $ 60
payroll $80
overhead control $140
C. overhead control $ 140
materials $60
payroll $80
D. none of the above
135. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered abnormal spoilage, what is the journal entry for overhead control?
A. no journal entry is needed
B. materials $ 60
payroll $80
overhead control $140
C. overhead control $ 140
materials $60
payroll $80
D. none of the above
136. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered abnormal spoilage, what is the cost of job 492?
A. $5,500
B. $5,760
C. $3,140
D. $5,640
137. The cost of spoilage is added to a job when it is considered to be
A. a result of the process, no matter what job is being worked on.
B. a normal consequence of working on that job.
C. abnormal.
D. all of these.
138. What is the most important factor that causes service firms to generally rank lower in customer satisfaction than manufacturing firms?
139. Compare and contrast perishability and intangibility in an automobile oil lubrication shop and architectural design firms.
140. Why are unit costs important? Why do full-cost unit costs change from accounting period to accounting period.
141. Why are firms reluctant to use actual costing? How does normal costing solve the problems?
142. Explain why actual costing systems are rarely used in practice.
143. What are the source documents used in a job-order costing system? How do the source documents relate to the job cost sheet? How do these documents inform work in process?
144. Sound of Thunder Company has a job costing system. The following items appeared in the Work-in-Process account during April 2014:
| April 1, 2014, balance | $20,000 |
| Materials placed into production | ? |
| Direct labor (4,000 hours) | $120,000 |
| Factory overhead applied | $96,000 |
| Cost of goods manufactured | $400,000 |
| April 30, 2014, balance | $16,000 |
Sound of Thunder applies overhead to production on the basis of direct labor hours. Job XX, the only job in process on April 30, has been charged $10,600 materials cost and has 100 labor hours of direct labor time assigned to it.
Required:
a. Determine the predetermined factory overhead rate for Sound of Thunder Company.
b. Determine the amounts of materials, direct labor, and factory overhead included in the
April 30, 2014, work in process.
c. Determine the amount of materials placed into production during April 2014.
145. Matriarch Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.
The following information pertains to November of the current year:
Job 10 Job 11 Job 12 Total
Work-in-process, Nov. 1 $16,000 $26,000 $38,000 $80,000
November production activity:
Materials requisitioned $4,000 $4,800 $7,200 $16,000
Direct labor cost $2,400 $3,600 $4,000 $10,000
Machine hours 400 700 900 2,000
Labor hours 120 180 200 500
Actual manufacturing overhead cost incurred in November was $61,000.
Required:
a. Compute the predetermined overhead application rate.
b. Determine the total cost associated with each job.
c. If jobs 10 and 12 were completed, prepared the journal entry to move the cost.
d. If job 10 was delivered to customers that paid $50,000 cash, prepare the journal
entries.
What is the gross profit for job 10?
e. Assuming no beginning work in process, what is the cost assigned to ending work in
process?
f. Assuming no beginning finished goods what is the cost assigned to ending finished goods?
g. How much was overhead over/underapplied?
146. Selected account balances of Samaritan Company for 2014 are as follows:
| Work in Process | $35,000 Debit |
| Finished Goods | $65,000 Debit |
| Cost of Goods Sold | $100,000 Debit |
| Factory Overhead | $22,000 Debit |
Required:
| a. | Were factory overhead costs underapplied or overapplied in 2014? Explain. |
| b. | Prepare the journal entry to dispose of the factory overhead balance assuming the amount is immaterial. |
| c. | Prepare the journal entry to dispose of the factory overhead balance using the allocation method. |
147. Coyote Company had the following selected account balances at the end of 2014:
| Work in Process | $120,000 |
| Finished Goods | 150,000 |
| Cost of Goods Sold | 180,000 |
| Factory Overhead (overapplied) | 63,000 |
Required:
| a. | Prepare the journal entry to dispose of the factory overhead balance assuming it is written off to Cost of Goods Sold. |
| b. | Prepare the journal entry to dispose of the factory overhead balance assuming it is allocated among Work in Process, Finished Goods, and Cost of Goods Sold based on ending balances. |
| c. | Which method of disposing of under- or overapplied factory overhead cost is more accurate? Explain. |
148. The following information was taken from the job cost sheet for Job 101 for McDonald Manufacturing Company:
| Date started: | December 5, 2014 |
| Date completed: | January 21, 2015 |
Direct |
Direct |
Applied Factory |
Job |
|
| Date | Materials | Labor | Overhead | Total |
| 12-05-14 | $3,000 | |||
| 12-15-14 | $ 900 | $450 | ||
| 12-17-14 | 1,500 | |||
| 12-22-14 | 1,350 | 675 | ||
| 01-01-15 | 1,500 | |||
| 01-21-15 | 600 | 300 | ||
Job 101 was sold on account on January 25, 2015, for 160 percent of its cost. Factory overhead is applied on the basis of direct labor costs.
Required:
| a. | Prepare the journal entries to record the costs incurred for Job 101 in 2014-2015 for direct materials, direct labor, and factory overhead. |
| b. | Prepare the journal entry to record the completion of Job 101. |
| c. | What is the predetermined factory overhead rate for McDonald Manufacturing? |
| d. | Prepare the journal entries to record the sale of Job 101. |
149. Stainless Steel Company has two production departments: A and B. Stainless Steel has following budgeted overhead costs and activity:
Overhead costs Direct labor hours Machine hours
Department A $ 50,000 10,000 5,000
Department B 175,000 5,000 25,000
Total $225,000 15,000 30,000
Production data for job 20 and 21 are given below:
Job 20 Job 21
Dept A Dept B Dept A Dept B
Prime costs $7,000 $12,000 $22,000 $30,000
Direct labor hours 50 5 60 5
Machine hours 10 40 10 50
Job 20 Job 21
Units produced 100 100
Required:
a. Compare the costs per unit of Job 20 if Stainless Steel uses
1. a plantwide rate based on direct labor hours;
2. a plantwide rate based on machine hours;
3. departmental rates with Department A based on direct
labor hours and Department B using machine hours.
(round to 2 decimal places)
b. Why is there such a variation in the cost per unit? Which method provides the best
cost assignment?
150. Salazar Company completed the following transactions with respect to its manufacturing operations during October 2014:
| a. | Materials costing $140,000 and indirect materials costing $16,800 were purchased on account. Assume indirect materials was debited to materials. |
| b. | A total of $70,000 of materials was requisitioned to the factory for manufacturing operations conducted during October. |
| c. | Manufacturing payroll for the month consisted of 2,000 hours of direct labor and 500 hours of indirect labor, both at $14 per hour. |
| d. | Indirect materials costing $7,000 were requisitioned. |
| e. | Depreciation on the factory building and equipment was $14,000. |
| f. | Miscellaneous factory overhead expenses totaled $5,600 for October. |
| g. | Factory overhead cost was applied to work in process at the rate of 125 percent of direct labor costs. |
| h. | Units of product with a total manufacturing cost of $84,000 were completed and transferred to the finished goods warehouse. |
| i. | Finished goods costing $49,000 were sold during October for $77,000 cash. |
Required:
Prepare journal entries for each of the transactions that occurred during October 2014.
151. Lowland Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 120,000 | number of setups | 6,000 |
| purchasing | 80,000 | number of parts | 20,000 |
| other overhead | 150,000 | direct labor hours | 75,000 |
The following information about the jobs was given for September.
| Job 1001 | Job 1002 | Job 1003 | Job 1004 | |
| Balance 9/1 | $44,900 | $60,700 | $30,500 | 0 |
| direct materials | 54,000 | 37,000 | 25,000 | 41,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 71,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 180 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By September 30, Jobs 1001 and 1003 were completed and sold. The remaining jobs were still in process.
Required:
1. Calculate the activity rates for each overhead activity.
2. Calculate the cost of each job for September 30.
3. What is the beginning work in process on September 1 and October 1?
4. What is the cost of goods manufactured?
5. What is the cost of goods sold?
6. Draw the T account for work in process. (include all debits and credits) Prepare the Statement of the Cost of Goods Manufactured.
Chapter 5–Product and Service Costing: Job-Order System Key
1. A production process may yield a tangible product or a service and their unique characteristics determine the best approach for developing a cost management system.
TRUE
2. Manufacturing firms produce intangible products that cannot be inventoried.
FALSE
3. Service firms produce intangible products that are not separable from the customer.
TRUE
4. Heterogeneity means that services cannot be inventoried and must be consumed when performed.
FALSE
5. Inseparability means that production and consumption are inseparable for services.
TRUE
6. The uniqueness of the products or units for cost accounting purposes relates to their common costs.
FALSE
7. Cost accumulation is the determination of the dollar amounts of direct materials, direct labor and overhead costs, and cost measurement is the recognition and recording of costs.
FALSE
8. cost assignment is the assignment of costs to products or services once the costs have been accumulated and measured.
TRUE
9. Unit cost is a critical piece of information for a manufacturing business as well as a service company.
TRUE
10. Activity level is the average activity usage over the long term and normal activity level is the production level for one year.
FALSE
11. Companies operating in job-order industries produce a wide variety of products or jobs that are quite different from each other.
TRUE
12. The job-order cost sheet accumulates the cost of all the jobs produced.
FALSE
13. The collection of all job-order cost sheets defines a work-in-process inventory file.
TRUE
14. The source document known as a time ticket assigns the direct overhead to each particular job.
FALSE
15. A job-order costing process would be applicable for to airplane manufacturer.
TRUE
16. Cost flow follows costs from the point they are incurred to the point they are recognized as an expense on the income statement.
TRUE
17. When materials are purchased, the costs of the materials “flows” into the materials inventory account.
TRUE
18. In a job-order costing system, direct labor costs assigned to a job are different than the costs assigned to work-in-process inventory.
FALSE
19. In a job-order costing system, actual overhead costs never enter the work-in-process inventory accounts
TRUE
20. The costs of a completed job are transferred from the work-in-process inventory account to the finished goods inventory account.
TRUE
21. A debit balance in overhead control implies that actual overhead costs exceed overhead applied.
TRUE
22. In job-order costing, departmental overhead rates and activity-based costing affect only the application of overhead.
TRUE
23. In an activity-based costing system activity cost is applied to each job by multiplying productivity rate by the job’s use of the associated driver.
TRUE
24. Costs of normal spoilage are included in overhead and applied to all good units produced.
TRUE
25. Abnormal spoilage is charged to the job that caused it.
TRUE
26. In __________ a single product is produced on a continuous basis.
process production
27. A __________ service organization does not use raw material or tangible items for the customer.
pure
28. __________ means that services cannot be inventoried but must be consumed when performed.
Perishability
29. __________ is the recognition and recording of costs.
cost accumulation
30. Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves __________ .
cost measurement
31. The association of production costs with the units produced is called __________ .
cost assignment
32. The __________ activity level is the production level a firm expects to attain for the coming year.
expected
33. The __________ costing system assigns costs by the job.
job-order or
job order
34. The __________ form indicates the type and quantity of each material issued to the factory.
materials requisition
35. A __________ inventory file is a file of job-order cost sheets.
work-in-process or
work in process
36. The actual __________ costs are not included on a job-order sheet.
factory overhead
37. Purchases of direct materials are recorded as a debit to the __________ account.
materials inventory
38. The entry that captures the flow of material from the storeroom to work-in-process is called
the __________ inventory account.
work-in-process or
work in process
39. __________ are the source of information for posting the labor cost flows.
Time tickets
40. The total applied overhead at a given point in time is given by the credit balance in the __________ control account.
overhead
41. When a job is completed the total costs are transferred to a __________ inventory file.
finished goods
42. When a job is shipped to a customer, the finished job cost becomes the cost of the __________ sold.
goods
43. In job-order costing, departmental overhead rates and activity-based costing affect only the application of __________ .
overhead
44. The defective units expected due to the nature of the typical production process are called __________ .
normal spoilage
45. The defective units due to the exacting nature of a particular job is called __________ .
abnormal spoilage
46. Which of the following is a manufactured product?
A. bungee jumping
B. beauty salon
C. automobile
D. restaurant
47. Manufacturers producing unique or customized products would employ a(n)
A. process costing system.
B. job-costing system.
C. homogeneous costing system.
D. all of the above.
48. Which of the following is a pure service?
A. bungee jumping
B. beauty salon
C. restaurant
D. software
49. A pure service organization has
A. no raw materials, no inventories, and a definite separation between the plant and the customer.
B. raw materials, tangible items, and no separation between the plant and the customer.
C. no raw materials, no tangible items, and no separation between the plant and the customer.
D. none of these.
50. Inseparability refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
51. Heterogeneity refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
52. Intangibility refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
53. Perishability refers to the
A. nonphysical nature of services as opposed to products.
B. fact that production and consumption are inseparable for services.
C. greater chances for variation in the performance of services than in the production of products.
D. fact that services cannot be inventoried but must be consumed when performed.
54. Which of the following firms would make extensive use of service costing?
A. Law firm
B. furniture manufacturer
C. auto dealer
D. auto manufacturer
55. Which of the following products would NOT use job-order costing?
A. houses
B. chemicals
C. ships
D. custom-built furniture
56. Which of the following firms would make extensive use of a job-order costing?
A. dental and medical services
B. canned foods
C. discount brokers
D. petroleum
57. Process costing would be most applicable for
A. custom machining.
B. an electronics producer.
C. high rise building construction.
D. CPA audits.
58. Which of the following would NOT use a process costing system?
A. electrical wire
B. cotton yarn
C. newsprint
D. satellites
59. Homogeneous products refer to
A. products similar in nature.
B. the nonphysical nature of services and opposed to products.
C. great variation in the nature products.
D. products that can be inventoried.
60. Which cost accounting process would be most appropriate for accumulating costs of identical, standardized units?
A. job-order costing
B. process costing
C. normal costing
D. standard costing
61. The process where a single product is produced on a continuous basis is called:
A. process production
B. job-order production
C. job production
D. both a and c
62. A source document
A. is only an external document.
B. provides transaction data that can be recorded in a database.
C. is only used to record a transaction between an organization and an outside vendor.
D. is only an internal document.
63. Which of the following costs is usually NOT easily traceable to finished units of product?
A. direct labor
B. direct materials
C. manufacturing overhead
D. all of the above
64. Manufacturing overhead consists of all
A. costs other than direct materials.
B. manufacturing costs other than direct materials.
C. costs other than direct materials and direct labor.
D. manufacturing costs other than direct materials and direct labor.
65. The recognition and recording of costs is called:
A. Cost assignment
B. Cost measurement
C. Cost accumulation
D. Job order costing
66. Determining the dollar amounts of direct materials, direct labor, and overhead used in production involves:
A. Job order costing
B. Cost accumulation
C. Cost assignment
D. Cost measurement
67. An actual overhead rate can be calculated
A. at the beginning of the year.
B. at the end of each month.
C. at the beginning of each month.
D. either at the beginning of the year or at the beginning of the month.
68. Disadvantages of actual costing include
A. actual cost systems cannot provide accurate unit cost information on a timely basis.
B. actual cost systems produce unit costs that fluctuate from period to period.
C. estimates must be used when calculating the actual overhead rate.
D. both a and b.
69. The effect of uniform production levels on unit production costs can be achieved
A. by using a factory overhead rate based on long-run normal production activity level.
B. by using a factory overhead rate based on selling price.
C. by closing the factory overhead at the end of the accounting period.
D. by using a factory overhead rate based on different production levels for each year.
70. Normal costing uses which cost in work in process?
A. applied direct materials
B. actual overhead
C. applied overhead
D. budgeted overhead
71. A normal costing system records which costs in work in process?
A. actual direct materials, actual direct labor, actual manufacturing overhead
B. applied direct materials, applied direct labor, applied manufacturing overhead
C. applied materials and labor and actual manufacturing overhead
D. actual materials and labor and applied manufacturing overhead
72. The predetermined overhead rate is usually calculated at the
A. end of each month.
B. beginning of each month.
C. beginning of the year.
D. end of the year.
73. Which of the following costing systems assigns actual costs of materials to inventory?
A. actual costing system
B. normal costing system
C. standard costing system
D. both a and b
74. The principal difficulty with normal costing is that
A. the unit cost information is not received on a timely basis.
B. it can result in fluctuating per-unit overhead costs.
C. estimated overhead and estimated activity are likely to differ from actual overhead and actual costs, resulting in underapplied or overapplied overhead.
D. there is no difficulty associated with using normal costing.
75. Unit cost information is needed for
A. costing inventory.
B. financial reporting requirements.
C. decision making.
D. all of the above.
76. The association of production costs with the units produced is called:
A. Job-order costing
B. Cost assignment
C. Cost measurement
D. Cost accumulation
77. The production level the firm expects to attain for the coming year is called:
A. Practical activity level
B. Normal activity level
C. Theoretical activity level
D. Expected activity level
78. Unit costs are critical for
A. valuing inventory.
B. determining net income.
C. decisions to enter a new product line.
D. all of the above.
79. In developing unit costs, overhead costs should be assigned using activity drivers. Which would be the likely activity driver for a production process using a lathe?
A. units produced
B. direct labor hours
C. machine hours
D. direct materials cost
80. Unit cost is important information for which of the following?
A. valuing inventory
B. determining income
C. decision making
D. all of the above
81. The average activity that a firm experiences in the long term (more than one year) is called:
A. Expected activity level
B. Normal activity level
C. Theoretical activity level
D. Practical activity level
82. The absolute maximum production activity of a manufacturing firm is called:
A. Expected activity level
B. Normal activity level
C. Theoretical activity level
D. Practical activity level
83. The maximum output that can be realized if everything operates efficiently is referred to as:
A. Expected activity level
B. Normal activity level
C. Theoretical activity level
D. Practical activity level
84. The system which assign(s) costs by the job is termed:
A. The process costing system
B. The job-order costing system
C. The project costing system
D. Both a and c
85. A job-order costing process would be most applicable for
A. a food processing plant.
B. natural gas processing.
C. airplane manufacturing.
D. fertilizer production.
86. The document which indicates the type and quantity of each material issued to the factory is called the:
A. control account
B. materials requisition form
C. production list
D. work ticket
87. The collection of all job cost sheets defines a
A. materials file.
B. finished goods file.
C. cost of goods file.
D. work-in-process file.
88. The document that identifies each job and accumulates its manufacturing costs is called:
A. job-order cost sheet
B. control account
C. production order
D. bill of materials
89. Which of the following items is a basic costing system record in a job-order costing system?
A. materials requisition form
B. job-order cost sheet
C. job time ticket
D. all of the above
90. The cost of direct materials is assigned to a job by the use of a source document known as a
A. job cost sheet.
B. control account.
C. materials requisition form.
D. production order.
91. A work-in-process inventory file is
A. a file of electronic job-order cost sheets.
B. a file cabinet where work tickets are stored.
C. a file of electronic materials requisitions.
D. none of these.
92. Direct labor costs are assigned to individual jobs using a source document known as a
A. job-order cost sheet.
B. payroll check.
C. time sheet.
D. requisition form.
93. Figure 5 – 1
The Nautical Corporation manufactures custom-made wood wall units. The following data pertains to Job X4A:
| Direct materials placed into production | $9,000 |
| Direct labor hours worked | 300 hours |
| Direct labor rate per hour | $15 |
| Machine hours worked | 100 hours |
Factory overhead rate is $22.50 per machine hour. Job X4A consists of 500 units.
Refer to Figure 5-1. One-half of Job X4A was sold for $10,000. What is the total amount of costs assigned to Job X4A?
A. $20,250
B. $15,750
C. $13,500
D. $9,000
94. Figure 5 – 1
The Nautical Corporation manufactures custom-made wood wall units. The following data pertains to Job X4A:
| Direct materials placed into production | $9,000 |
| Direct labor hours worked | 300 hours |
| Direct labor rate per hour | $15 |
| Machine hours worked | 100 hours |
Factory overhead rate is $22.50 per machine hour. Job X4A consists of 500 units.
Refer to Figure 5-1. One-half of Job X4A was sold for $10,000. What is the cost per unit for Job X4A?
A. $18
B. $31.50
C. $27
D. $40.50
95. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is overhead cost assigned to Job XY5?
A. $200
B. $400
C. $750
D. $1,500
96. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is the materials cost per unit for Job XY5?
A. $267
B. $80
C. $40
D. $4
97. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What is the labor cost per unit for Job XY5?
A. $4
B. $15
C. $0.80
D. $40
98. Figure 5 – 2
The Cameron Corporation manufactures custom-made purses. The following data pertains to Job XY5:
| Direct materials placed into production | $4,000 |
| Direct labor hours worked | 50 hours |
| Direct labor rate per hour | $ 15 |
| Machine hours worked | 100 hours |
Factory overhead is applied using a plant-wide rate based on direct labor hours. Factory overhead was budgeted at $80,000 for the year and the direct labor hours were estimated to be 20,000. Job XY5 consists of 50 units.
Refer to Figure 5-2. What the total cost assigned to Job XY5?
A. $5,1500
B. $4,400
C. $4,200
D. $4,950
99. Which of the following costs is NOT included on a job-order cost sheet?
A. direct material costs
B. applied factory overhead costs
C. direct labor costs
D. actual factory overhead costs
100. A debit to Materials Inventory indicates materials were
A. ordered.
B. requisitioned.
C. put into production.
D. purchased.
101. Figure 5 – 3
Robinson Corporation constructs new homes. Assume that Robinson uses a job costing system. During July 2014, the following transactions occurred:
Robinson purchased $4,500 of lumber on account.
Robinson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash.
Refer to Figure 5-3. The journal entry to record the requisition of lumber for Robinson would include a
A. debit to Work-in-Process of $4,500.
B. debit to Materials Inventory of $3,750.
C. credit to Finished Goods of $3,750.
D. debit to Work-in-Process of $3,750.
102. Figure 5 – 3
Robinson Corporation constructs new homes. Assume that Robinson uses a job costing system. During July 2014, the following transactions occurred:
Robinson purchased $4,500 of lumber on account.
Robinson used $3,750 of lumber in production and incurred 50 hours of direct labor hours at $15 per hour.
Depreciation of $1,500 on equipment used to build new houses was recorded.
A house that was completed last period at a cost of $150,000 was sold for $180,000 in cash.
Refer to Figure 5-3. The journal entry to record labor for Robinson would include a
A. debit to Finished Goods of $750.
B. debit to Wages Payable of $750.
C. credit to Finished Goods of $750.
D. debit to Work-in-Process of $750.
103. Figure 5 – 4
Lanyard Company uses a job-order costing system to account for product costs. The following information pertains to 2014:
| Materials placed into production | $140,000 |
| Indirect labor | 40,000 |
| Direct labor (10,000 hours) | 160,000 |
| Depreciation of factory building | 60,000 |
| Other factory overhead | 100,000 |
| Increase in work-in-process inventory | 30,000 |
Factory overhead rate is $18 per direct labor hour.
Refer to Figure 5-4. What is the total amount credited to Materials Inventory for Lanyard in 2014?
A. $480,000
B. $170,000
C. $140,000
D. $110,000
104. Figure 5 – 4
Lanyard Company uses a job-order costing system to account for product costs. The following information pertains to 2014:
| Materials placed into production | $140,000 |
| Indirect labor | 40,000 |
| Direct labor (10,000 hours) | 160,000 |
| Depreciation of factory building | 60,000 |
| Other factory overhead | 100,000 |
| Increase in work-in-process inventory | 30,000 |
Factory overhead rate is $18 per direct labor hour.
Refer to Figure 5-4. What is the total amount debited to Finished Goods Inventory in 2011?
A. $490,000
B. $510,000
C. $450,000
D. $550,000
105. A journal entry debiting Work-in-Process would normally NOT be accompanied by a credit to
A. Materials Inventory.
B. Finished Goods.
C. Overhead Control.
D. Wages Payable.
106. If there is a debit balance in overhead control, that implies
A. applied overhead exceeds actual overhead.
B. actual overhead costs exceed overhead applied. a
C. actual overhead has not been closed to cost of goods sold.
D. none of the above.
107. For a manufacturer, the three inventory accounts on the balance sheet are
A. Materials, Finished Goods, and Cost of Goods Sold.
B. Materials, Overhead, and Cost of Goods Sold.
C. Materials, Direct Labor, and Overhead.
D. Materials, Work-in-Process, and Finished Goods.
108. In a traditional enterprise, the flow of costs through the system is
A. materials inventory, work-in-process inventory, finished goods inventory, cost of goods sold.
B. materials inventory, work-in-process inventory, cost of goods sold, finished goods inventory.
C. work-in-process inventory, materials inventory, finished goods inventory, cost of goods sold.
D. work-in-process inventory, materials inventory, finished goods.
109. When normal costing is used, actual overhead costs are
A. recorded in the work-in-process account.
B. recorded in the overhead control account.
C. recorded in the finished goods account.
D. not recorded.
110. Collossal Company uses a predetermined rate to apply overhead. At the beginning of the year, Collossal estimated its overhead costs at $240,000, direct labor hours at 40,000, and machine hours at 10,000. Actual overhead costs incurred were $249,280, actual direct labor hours were 41,000, and actual machine hours were 11,000.
If the predetermined overhead rate is based on machine hours, what is the total amount credited to the factory overhead account for the year for Collossal?
A. $249,280
B. $246,000
C. $240,000
D. $264,000
111. On March 9, 2014, Job XX4 was completed. The job cost sheet showed a total of $6,000 in direct materials and $8,000 in direct labor at a rate of $20 per direct labor hour. Factory overhead is applied at $30 per direct labor hour. The debit to Finished Goods Inventory to record the completion of Job XX4 is
A. $17,000.
B. $11,000.
C. $6,000.
D. $26,000.
112. Figure 5-5
Tonneau Corporation had the following information available for October 2014:
| Work in Process, October 1 | $20,000 |
| Materials placed into production, October | 27,500 |
| Direct labor, October | 37,500 |
Factory overhead rate is 150 percent of direct labor costs.
Job cost sheets had the following balances:
| Job Z1 | $32,500 |
| Job Z2 | 55,000 |
| Job Z3 | 35,000 |
| Job Z4 | 18,750 |
Jobs Z3 and Z4 were not completed at the end of December.
Refer to Figure 5-5. What is the balance in Work-in-Process for Tonneau at the end of October?
A. $85,000
B. $87,500
C. $56,250
D. $53,750
113. Figure 5-5
Tonneau Corporation had the following information available for October 2014:
| Work in Process, October 1 | $20,000 |
| Materials placed into production, October | 27,500 |
| Direct labor, October | 37,500 |
Factory overhead rate is 150 percent of direct labor costs.
Job cost sheets had the following balances:
| Job Z1 | $32,500 |
| Job Z2 | 55,000 |
| Job Z3 | 35,000 |
| Job Z4 | 18,750 |
Jobs Z3 and Z4 were not completed at the end of December.
Refer to Figure 5-5. What is the cost of goods finished during October for Tonneau Corporation?
A. $85,000
B. $87,500
C. $56,250
D. $53,750
114. Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month:
Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month, Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Refer to Figure 5-6. What is the cost of goods sold for the month?
A. $10,730
B. $10,850
C. $12,575
D. none of these
115. Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month:
Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month, Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Refer to Figure 5-6. What is the ending work-in-process inventory for the month?
A. $10,730
B. $4,250
C. $12,575
D. none of these
116. Figure 5 – 6
In the Monroe Company, the following Job cards were totaled at the end of the month:
Job 243 $5,750
Job 244 $4,980
Job 245 $3,675
Job 246 $4,250
Job 247 $5,100
Job 248 $3,800
Jobs 243 and 244 were in Finished Goods Inventory at the beginning of the month. Jobs 245 and 246 were in Work-in-process at the beginning of the month. Jobs 247 and 248 were started during the month. At the end of the month, Jobs 243 and 247 were sent to customers; jobs 245, 247, and 248 were completed and sent to finished goods.
Refer to Figure 5-6. What is the cost of goods manufactured for the month?
A. $10,730
B. $10,850
C. $12,575
D. none of these
117. Canmore Company has the following data pertaining to 2014:
| Beginning materials inventory | $ 50,000 |
| Beginning work-in-process inventory | -0- |
| Beginning finished goods inventory | -0- |
| Materials placed into production | 125,000 |
| Materials purchased on account | 137,500 |
| Direct labor incurred (10,000 hours) | 62,500 |
| Cost of goods completed (Job BB8) | 25,000 |
Factory overhead rate is 125 percent of direct labor costs.
What is the ending materials inventory balance for Canmore in 2014?
A. $50,000
B. $62,500
C. $12,500
D. $37,500
118. Samuelson Company has the following selected debit balance accounts at the end of the current year: Work-in-Process, $25,000; Finished Goods, $12,500; Cost of Goods Sold, $37,500; and Factory Overhead, $6,000. The pro-rated amount charged to Cost of Goods Sold for factory overhead will be
A. $25,000.
B. $3,000.
C. $37,500.
D. $6,000.
119. Under normal costing, which of the following statements is true regarding factory overhead?
A. The balance in factory overhead at the end of the accounting period is closed.
B. Different overhead rates are used for different quantities of predicted activity.
C. The balance in factory overhead at the end of the accounting period is kept open.
D. The immaterial balance in factory overhead at the end of the accounting period is allocated to the cost of goods sold and inventory accounts.
120. Total manufacturing-related costs incurred for Anhauser Company in August for all jobs is as follows:
| Direct materials | $ 900 |
| Insurance-factory building | 150 |
| Direct labor | 1,200 |
| Property taxes-factory building | 400 |
| Other factory overhead costs | 1,450 |
| Factory overhead applied | 1,650 |
Assuming Anhauser uses a normal costing system and applies overhead based on a predetermined rate, what is the credit to Overhead Control to close the account at the end of the year?
A. $900
B. $350
C. $1,450
D. $1,650
121. Which of the following transactions in a job-order costing system requires the procedure of merely moving a job-order cost sheet from one file to another?
A. applying factory overhead to jobs
B. closing overapplied factory overhead
C. delivering a completed job to a customer
D. moving the job from one production department to another
122. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. What is the plantwide overhead rate based on direct labor hours?
A. $1.00
B. $1.50
C. $3.00
D. $9.00
123. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. Using the plantwide overhead rate based on direct labor hours what is the cost of Job 4X5?
A. $1,250
B. $2,000
C. $8,750
D. $31,250
124. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. What is the overhead rate for the Finishing Department based on machine hours?
A. $9.00
B. $3.00
C. $2.25
D. $1.00
125. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. Based on departmental overhead rates, what is the cost of Job 4X5? Departmental overhead rates for the Assembly Department are based on direct labor hours, while departmental overhead rates for the Finishing Department are based on machine hours.
A. $31,250
B. $8,750
C. $2,000
D. $1,250
126. Figure 5-7
The following information is available pertaining to the Production Division of Clarkson Enterprises:
| Assembly Dept. | Finishing Dept. | Total | |
| Overhead costs | $7,500 | $22,500 | $30,000 |
| Direct labor hours | 7,500 | 2,500 | 10,000 |
| Machine hours | 2,500 | 7,500 | 10,000 |
| Production information pertaining to Job 4X5: | |||
| Assembly Dept. | Finishing Dept. | Total | |
| Prime costs | $1,250 | $-0- | $1,250 |
| Direct labor hours | 250 | -0- | 250 |
| Machine hours | -0- | -0- | -0- |
| Units produced | 500 | -0- | 500 |
Refer to Figure 5-7. What are the total overhead costs assigned to Job 4X5, assuming the Assembly and Finishing Departments use direct labor hours and machine hours for their bases, respectively?
A. $62.50
B. $250.00
C. $750.00
D. $1,500.00
127. In a job-order costing system, if costs are incurred to rework a job due to inadequate training of personnel, these costs would be
A. debited to the job.
B. debited to manufacturing overhead control.
C. credited to manufacturing overhead control.
D. credited to the cost of goods sold.
128. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. What is the activity rate for purchasing?
A. $ 1.25
B. $ 8
C. $ 3.75
D. $ 40
129. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. What is the cost of job 102?
A. $ 86,440
B. $ 127,210
C. $ 117,170
D. none of the above
130. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. What is the cost of goods manufactured?
A. $ 144,400
B. $ 215,670
C. $ 178,340
D. $ 249,610
131. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. The ending work in process would consist of the costs of what jobs?
A. Job 102 + Job 103
B. Job 101 + Job 104
C. Job 101 + Job 102 + Job 103 + Job 104
D. Job 101 + Job 102 + Job 103
132. Figure 5 – 8
Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 240,000 | number of setups | 6,000 |
| purchasing | 160,000 | number of parts | 20,000 |
| other overhead | 300,000 | direct labor hours | 80,000 |
The following information about the jobs was given for April.
| Job 101 | Job 102 | Job 103 | Job 104 | |
| Balance 4/1 | $64,900 | $40,770 | $30,500 | 0 |
| direct materials | 54,000 | 37,900 | 25,000 | 11,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 21,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 80 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
Refer to Figure 5-8. The cost of goods sold would consist of the costs of what jobs?
A. Job 102 + Job 103
B. Job 101 + Job 104
C. Job 101 + Job 102 + Job 103 + Job 104
D. Job 101 + Job 102 + Job 103
133. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the spoilage was considered normal, what is the cost of job 492?
A. $5,500
B. $5,640
C. $5,760
D. $3,000
134. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered normal spoilage, what is the journal entry for overhead control?
A. no journal entry is needed
B. materials $ 60
payroll $80
overhead control $140
C. overhead control $ 140
materials $60
payroll $80
D. none of the above
135. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered abnormal spoilage, what is the journal entry for overhead control?
A. no journal entry is needed
B. materials $ 60
payroll $80
overhead control $140
C. overhead control $ 140
materials $60
payroll $80
D. none of the above
136. Figure 5-9
The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
| direct materials | $3,000 | |
| direct labor ($10/hr) | 1,000 | |
| overhead (150% DL$) | 1,500 | |
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered abnormal spoilage, what is the cost of job 492?
A. $5,500
B. $5,760
C. $3,140
D. $5,640
137. The cost of spoilage is added to a job when it is considered to be
A. a result of the process, no matter what job is being worked on.
B. a normal consequence of working on that job.
C. abnormal.
D. all of these.
138. What is the most important factor that causes service firms to generally rank lower in customer satisfaction than manufacturing firms?
Employees are key to customer services. Service firms have a greater heterogeneity of labor due to different skills and abilities for interacting with customers and each other. Employees may not even behave the same from one day to another, creating inconsistency in the level of service. In manufacturing, employees are interacting with machinery in more routine tasks. Performance is more consistent.
139. Compare and contrast perishability and intangibility in an automobile oil lubrication shop and architectural design firms.
Intangibility refers to the nonphysical nature of services. There can be no inventory of services. Both lube jobs and architectural designs must be performed upon the demand of the customer to meet the specifications-of the car, land, etc. Perishability also means that services cannot be inventoried because they are consumed when they are performed. The consumption of service means that customers may need repeated treatments. Oil lubes are much more perishable than architectural designs. There is a more frequent need for lube jobs than design jobs.
140. Why are unit costs important? Why do full-cost unit costs change from accounting period to accounting period.
Unit costs are important for valuing inventory, calculating the COGS and net income, and for making decisions. Full-cost unit costs consist of direct materials, direct labor and manufacturing overhead. If there are changes in production volume, the fixed manufacturing overhead will be spread over different numbers of units causing unit costs to change.
141. Why are firms reluctant to use actual costing? How does normal costing solve the problems?
Actual costing systems do not provide accurate unit cost information on a timely basis because manufacturing overhead costs are indirect costs that may fluctuate dramatically from month to month and may be incurred independent of nonuniform production levels. Normal costing averages overhead over the entire year and applies it as production takes place.
142. Explain why actual costing systems are rarely used in practice.
Actual costing systems are rarely used in practice because they do not provide accurate unit cost information on a timely basis. Actual per-unit overhead costs can vary dramatically from period to period because (1) actual costs vary from period to period and/or (2) the number of units produced may vary from period to period. Thus, when actual costing is used, a unit produced during a low-volume month may be assigned a higher cost than a unit produced during a high-volume month, even though the units are identical.
To avoid fluctuations in per-unit costs using actual overhead costs, it is necessary to wait until the end of the period and use total actual overhead costs for the year to calculate per-unit amounts. However, that information is received too late to be used throughout the year for planning, control, and decision making. Using a normal costing system and a predetermined overhead rate avoids the problems associated with an actual costing system.
143. What are the source documents used in a job-order costing system? How do the source documents relate to the job cost sheet? How do these documents inform work in process?
The materials requisition form and job time tickets are the source documents for materials and labor. The materials requisition form is used to bring materials needed for production to the production floor for different jobs. The job time ticket is kept for each laborer. It reports the time spent working on different jobs. These source documents are used to assign materials and labor costs to job cost sheets. The job cost sheet collects all the materials, labor, and overhead applied to each job. The job cards are read and summarized to create the WIP account.
144. Sound of Thunder Company has a job costing system. The following items appeared in the Work-in-Process account during April 2014:
| April 1, 2014, balance | $20,000 |
| Materials placed into production | ? |
| Direct labor (4,000 hours) | $120,000 |
| Factory overhead applied | $96,000 |
| Cost of goods manufactured | $400,000 |
| April 30, 2014, balance | $16,000 |
Sound of Thunder applies overhead to production on the basis of direct labor hours. Job XX, the only job in process on April 30, has been charged $10,600 materials cost and has 100 labor hours of direct labor time assigned to it.
Required:
a. Determine the predetermined factory overhead rate for Sound of Thunder Company.
b. Determine the amounts of materials, direct labor, and factory overhead included in the
April 30, 2014, work in process.
c. Determine the amount of materials placed into production during April 2014.
a. Factory overhead rate = $96,000/4,000 = $24 per direct labor hour
b. Costs assigned to Job XX:
| materials | $10,600 |
| direct labor (100 ´ $30*) | 3,000 |
| factory overhead applied (100 ´ $24) | 2,400 |
| work in process, April 30, 2014 | $16,000 |
* $120,000/4000 = $30 per hour
c. $X + $120,000 +$96,000 + $20,000 – $16,000 = $400,000
X = $180,000
145. Matriarch Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.
The following information pertains to November of the current year:
Job 10 Job 11 Job 12 Total
Work-in-process, Nov. 1 $16,000 $26,000 $38,000 $80,000
November production activity:
Materials requisitioned $4,000 $4,800 $7,200 $16,000
Direct labor cost $2,400 $3,600 $4,000 $10,000
Machine hours 400 700 900 2,000
Labor hours 120 180 200 500
Actual manufacturing overhead cost incurred in November was $61,000.
Required:
a. Compute the predetermined overhead application rate.
b. Determine the total cost associated with each job.
c. If jobs 10 and 12 were completed, prepared the journal entry to move the cost.
d. If job 10 was delivered to customers that paid $50,000 cash, prepare the journal
entries.
What is the gross profit for job 10?
e. Assuming no beginning work in process, what is the cost assigned to ending work in
process?
f. Assuming no beginning finished goods what is the cost assigned to ending finished goods?
g. How much was overhead over/underapplied?
a. $240,000/8,000 = $30
b. Job 10 Job 11 Job 12 Total
Work in process, Nov. 1 $16,000 $26,000 $38,000 $80,000
Materials requisitioned $ 4,000 $ 4,800 $ 7,200 $16,000
Direct labor cost $ 2,400 $ 3,600 $ 4,000 $10,000
Overhead applied:
Machine hours
400 ´ $30 $12,000
700 ´ $30 $21,000
900 ´ $30 $27,000
total 34,400 55,400 76,200
c. Finished goods $110,600
Work in process $110,600
job 10 + job 12 = 34,400 + 76,200 = $110,600 (the cost of goods manufactured)
d. record a sale
Cash $50,000
Sales $50,000
Cost of goods sold $34,400
Finished goods $34,400
Sales $50,000
CGS 34,400
Gross Profit $15,600
e. Job 11 is still in production = $55,400
f. Finished goods has one job – job 12 = $76,200
g. Actual overhead $61,000
Applied overhead (12,000 + 21,000 + 27,000 )= $60,000
Underapplied overhead $ 1,000
146. Selected account balances of Samaritan Company for 2014 are as follows:
| Work in Process | $35,000 Debit |
| Finished Goods | $65,000 Debit |
| Cost of Goods Sold | $100,000 Debit |
| Factory Overhead | $22,000 Debit |
Required:
| a. | Were factory overhead costs underapplied or overapplied in 2014? Explain. |
| b. | Prepare the journal entry to dispose of the factory overhead balance assuming the amount is immaterial. |
| c. | Prepare the journal entry to dispose of the factory overhead balance using the allocation method. |
| a. | Underapplied by $22,000 | ||
| The actual costs were $22,000 greater than those applied to work-in-process. | |||
| b. | Cost of Goods Sold | 22,000 | |
| Factory Overhead | 22,000 | ||
| c. | Work in Process (35,000/200,000) | 3,850 | |
| Finished Goods (65,000/200,000) | 7,150 | ||
| Cost of Goods Sold (100,000/200,000) | 11,000 | ||
| Factory Overhead | 22,000 | ||
147. Coyote Company had the following selected account balances at the end of 2014:
| Work in Process | $120,000 |
| Finished Goods | 150,000 |
| Cost of Goods Sold | 180,000 |
| Factory Overhead (overapplied) | 63,000 |
Required:
| a. | Prepare the journal entry to dispose of the factory overhead balance assuming it is written off to Cost of Goods Sold. |
| b. | Prepare the journal entry to dispose of the factory overhead balance assuming it is allocated among Work in Process, Finished Goods, and Cost of Goods Sold based on ending balances. |
| c. | Which method of disposing of under- or overapplied factory overhead cost is more accurate? Explain. |
| a. | Factory Overhead | 63,000 | |
| Cost of Goods Sold | 63,000 | ||
| b. | Factory Overhead | 63,000 | |
| Work in Process (120/450) | 16,800 | ||
| Finished Goods (150/450) | 21,000 | ||
| Cost of Goods Sold (180/450) | 25,200 | ||
| c. | When the amount of overapplied or underapplied overhead is immaterial, writing it off to Cost of Goods Sold is sufficient. If the amount is material, allocating the amount to the two inventories (WIP and FG) and Cost of Goods Sold is preferable. | ||
148. The following information was taken from the job cost sheet for Job 101 for McDonald Manufacturing Company:
| Date started: | December 5, 2014 |
| Date completed: | January 21, 2015 |
Direct |
Direct |
Applied Factory |
Job |
|
| Date | Materials | Labor | Overhead | Total |
| 12-05-14 | $3,000 | |||
| 12-15-14 | $ 900 | $450 | ||
| 12-17-14 | 1,500 | |||
| 12-22-14 | 1,350 | 675 | ||
| 01-01-15 | 1,500 | |||
| 01-21-15 | 600 | 300 | ||
Job 101 was sold on account on January 25, 2015, for 160 percent of its cost. Factory overhead is applied on the basis of direct labor costs.
Required:
| a. | Prepare the journal entries to record the costs incurred for Job 101 in 2014-2015 for direct materials, direct labor, and factory overhead. |
| b. | Prepare the journal entry to record the completion of Job 101. |
| c. | What is the predetermined factory overhead rate for McDonald Manufacturing? |
| d. | Prepare the journal entries to record the sale of Job 101. |
| a. | Work-in-Process | 6,000 | |
| Materials | 6,000 | ||
| Work-in-Process | 2,850 | ||
| Wages Payable | 2,850 | ||
| Work-in-Process | 1,425 | ||
| Factory Overhead | 1,425 | ||
| b. | Finished Goods | 10,275 | |
| Work-in-Process | 10,275 | ||
| c. | $1,425/$2,850 = 50% of direct labor costs | ||
| d. | Accounts Receivable | 16,440 | |
| Sales | 16,440 | ||
| Cost of Goods Sold | 10,275 | ||
| Finished Goods | 10,275 | ||
149. Stainless Steel Company has two production departments: A and B. Stainless Steel has following budgeted overhead costs and activity:
Overhead costs Direct labor hours Machine hours
Department A $ 50,000 10,000 5,000
Department B 175,000 5,000 25,000
Total $225,000 15,000 30,000
Production data for job 20 and 21 are given below:
Job 20 Job 21
Dept A Dept B Dept A Dept B
Prime costs $7,000 $12,000 $22,000 $30,000
Direct labor hours 50 5 60 5
Machine hours 10 40 10 50
Job 20 Job 21
Units produced 100 100
Required:
a. Compare the costs per unit of Job 20 if Stainless Steel uses
1. a plantwide rate based on direct labor hours;
2. a plantwide rate based on machine hours;
3. departmental rates with Department A based on direct
labor hours and Department B using machine hours.
(round to 2 decimal places)
b. Why is there such a variation in the cost per unit? Which method provides the best
cost assignment?
a. Overhead rates if Stainless Steel uses
1. a plantwide rate based on direct labor hours;
$225,000/15,000 = $15.00 DLH
2. a plantwide rate based on machine hours;
$225,000/30,000 = $7.50 MH
3. departmental rates with department A based on direct
labor hours and department B using machine hours.
A $50,000/10,000 = $5 DLH
B $175,000/25,000 = $7 MH
b. The variation in the cost per unit is due to the variation in consumption.
150. Salazar Company completed the following transactions with respect to its manufacturing operations during October 2014:
| a. | Materials costing $140,000 and indirect materials costing $16,800 were purchased on account. Assume indirect materials was debited to materials. |
| b. | A total of $70,000 of materials was requisitioned to the factory for manufacturing operations conducted during October. |
| c. | Manufacturing payroll for the month consisted of 2,000 hours of direct labor and 500 hours of indirect labor, both at $14 per hour. |
| d. | Indirect materials costing $7,000 were requisitioned. |
| e. | Depreciation on the factory building and equipment was $14,000. |
| f. | Miscellaneous factory overhead expenses totaled $5,600 for October. |
| g. | Factory overhead cost was applied to work in process at the rate of 125 percent of direct labor costs. |
| h. | Units of product with a total manufacturing cost of $84,000 were completed and transferred to the finished goods warehouse. |
| i. | Finished goods costing $49,000 were sold during October for $77,000 cash. |
Required:
Prepare journal entries for each of the transactions that occurred during October 2014.
| a. | Materials | 156,800 | |
| Accounts Payable | 156,800 | ||
| b. | Work-in-Process | 70,000 | |
| Materials | 70,000 | ||
| c. | Work-in-Process (2,000 ´ $14) | 28,000 | |
| Factory Overhead (500 ´ $14) | 7,000 | ||
| Wages Payable | 35,000 | ||
| d. | Factory Overhead | 7,000 | |
| Materials | 7,000 | ||
| e. | Factory Overhead | 14,000 | |
| Accumulated Depreciation | 14,000 | ||
| f. | Factory Overhead | 5,600 | |
| Various Accounts | 5,600 | ||
| g. | Work-in-Process (28,000 ´ 125%) | 35,000 | |
| Factory Overhead | 35,000 | ||
| h. | Finished Goods | 84,000 | |
| Work-in-Process | 84,000 | ||
| i. | Cash | 77,000 | |
| Sales | 77,000 | ||
| Cost of Goods Sold | 49,000 | ||
| Finished Goods Inventory | 49,000 | ||
151. Lowland Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year.
| Activity | Cost | Driver | Amount of driver |
| setups | $ 120,000 | number of setups | 6,000 |
| purchasing | 80,000 | number of parts | 20,000 |
| other overhead | 150,000 | direct labor hours | 75,000 |
The following information about the jobs was given for September.
| Job 1001 | Job 1002 | Job 1003 | Job 1004 | |
| Balance 9/1 | $44,900 | $60,700 | $30,500 | 0 |
| direct materials | 54,000 | 37,000 | 25,000 | 41,000 |
| direct labor | 80,000 | 38,500 | 43,000 | 71,000 |
| number of setups | 40 | 10 | 30 | 200 |
| number of parts | 300 | 180 | 400 | 500 |
| direct labor hours | 5,000 | 2,400 | 5,200 | 1,200 |
By September 30, Jobs 1001 and 1003 were completed and sold. The remaining jobs were still in process.
Required:
1. Calculate the activity rates for each overhead activity.
2. Calculate the cost of each job for September 30.
3. What is the beginning work in process on September 1 and October 1?
4. What is the cost of goods manufactured?
5. What is the cost of goods sold?
6. Draw the T account for work in process. (include all debits and credits) Prepare the Statement of the Cost of Goods Manufactured.
1.
| Activity | Cost | Amount of Driver | Activity rate |
| setups | $ 120,000 | 6,000 | $ 20 |
| purchasing | 80,000 | 20,000 | 4 |
| other overhead | 150,000 | 75,000 | 2 |
2.
| Job 1001 | Job 1002 | Job 1003 | Job 1004 | Total | |
| Balance 9/1 | $44,900 | $60,700 | $30,500 | 0 | 136,100 |
| dm | 54,000 | 37,000 | 25,000 | 41,000 | 157,000 |
| dl | 80,000 | 38,500 | 43,000 | 71,000 | 232,500 |
| # setups $20 | ( 40) 800 | (10) 200 | (30) 600 | (200) 4,000 | 5,600 |
| # parts $4 | (300) 1,200 | (180) 720 | (400) 1,600 | (500) 2,000 | 5,520 |
| dlhours $2 | (5,000) 10,000 | (2,400) 4,800 | (5,200) 10,400 | (1,200) 2,400 | 27,600 |
| TOTAL | $190,900 | $141,920 | $111,100 | $120,400 | $564,320 |
3. BWIP = $136,100
EWIP 9/30 = BWIP 10/1 = jobs 1002 + 1004 = $141,920 + $120,400 = $262,320
4. CGM = jobs 1001 + 1003 = $190,900 + $111,100 = $302,000
5. CGS = jobs 1001 + 1003 = $190,900 + $111,100 = $302,000
6. WIP
___________________________________________
BI 136,100 | 302,000
DM 157,000 |
DL 232,500 |
MOH 38,720 |
_________________ |__________________________
EI 262,320
STATEMENT OF COST OF GOODS MANUFACTURED
Lowland Corporation
Month of September
Direct materials used in production $157,000
Direct labor 232,500
Manufacturing overhead applied 38,720
Total manufacturing costs added 428,220
Add: beginning work in process 136,100
Less: ending work in process 262,320
Cost of Goods manufactured 302,000
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