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Exam 19: Job Order Costing

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Question 21

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Chung Corporation uses a job order costing system. Five jobs were worked on during the current year. The predetermined overhead rate is 20% of direct labor costs. The following cost information is available (all materials and time ticket information applies to direct costs): $\begin{array} { l | l | l } \text { Job } & \text { Materials Requistions } & \text { Time Tickets } \\\hline 101 & \$ 66,000 & \$ 32,000 \\\hline 102 & \$ 63,000 & \$ 74,000 \\\hline 103 & \$ 39,000 & \$ 50,000 \\\hline 104 & \$ 32,000 & \$ 36,000 \\\hline 105 & \$ 53,000 & \$ 68,000\end{array}$ Part 1-Complete the job cost sheets for each job. $\begin{array} { l | l | l | l | l | l } \text { Job No. 101 } & & \text { Job No. 102 } & & \text { Job No. 103 } & \\\hline \text { Materials } & & \text { Materials } & & \text { Materials } & \\\hline \text { Labor } & & \text { Labor } & & \text { Labor } & \\\hline \text { Overhead } & & \text { Overhead } & & \text { Overhead } & \\\hline \text { Total Cost } & & \text { Total Cost } & & \text { Total Cost } & \\\hline \text { Status } & \text { In Process } & \text { Status } & \text { Sold } & \text { Status } & \text { Finithed }\end{array}$ $\begin{array} { l | l | l | l } \hline \text { Job No. 104 } & & \text { Job No. 105 } & \\\hline \text { Materials } & & \text { Materials } & \\\hline \text { Labor } & & \text { Labor } & \\\hline \text { Overhead } & & \text { Overhead } & \\\hline \text { Total Cost } & & \text { Total Cost } & \\\hline \text { Status } & \text { Sold } & \text { Status } & \text { Firished }\end{array}$ Part 2-Identify the amounts of each of the following accounts at the end of the period a. Work in Process________ b. Finished Goods________ c. Cost of Goods Sold________

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Question 22

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

A) $16,000
B) $32,000
C) $22,500
D) $37,000
E) $26,500

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

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Question 23

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The job order cost sheets used by Greene Company revealed the following: $\begin{array} { c c c } \text { Job. No. } & \text { Bal., May 1 } & \text { May Production Costs } \\134 & \$ 1,700 & \$0 \\135 & 1,200 & 300 \\136 &0 &900 \\& &\end{array}$ Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the Work in Process inventory on May 31?

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 direct materials and $13,000 indirect materials. - How should Andrews journalize the purchase of raw materials for March?

Booth Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct material cost. At year-end, the Work in Process Inventory account shows the following. $\begin{array} { | l | l | l | l | l | } \hline \text { Date } & \text { Explanation } & \text { Debit } & \text { Credit } & \text { Balance } \\\hline \text { Dec. 31 } & \text { Direct materials cost } & 980,000 & & 980,000 \\\hline 31 & \text { Direct labor cost } & 320,000 & & 1,300,000 \\\hline 31 & \text { Overhead costs } & 637,000 & & 1,937,000 \\\hline 31 & \text { To finished goods } & & 1,818,000 & 119,000 \\\hline\end{array}$ a. Determine the overhead rate used (based on direct material cost). b. Only one job remained in the Work in Process inventory at December 31. Its direct materials cost is $60,000. How much direct labor cost and overhead cost are assigned to it?

Underapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Immaterial amounts of overapplied overhead should be ________ to the ________ account when closed.

A job order costing system would best fit the needs of a company that makes:

A job order costing system would be appropriate for a manufacturer of automobile tires.

Manufacturing costs incurred for jobs completed during an accounting period can bypass the inventory accounts on the balance sheet and be recorded directly in expense accounts.

Match the following definitions with the appropriate term

A company charged the following amounts of overhead to jobs during the current year: $12,000 to jobs still in process, $42,000 to jobs completed but not sold, and $66,000 to jobs finished and sold. At year-end, the company's Factory Overhead account has a credit balance of $9,000, which is not a material amount. What entry (if any) should the company make at year-end related to this overhead balance?

A manufacturing company uses an overhead rate based on direct labor cost. The company's Work in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of $3,000. What is the company's overhead application rate?

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. - The journal entry to record the purchase of materials is:

In a job order costing system, any immaterial underapplied overhead at the end of the period can be charged entirely to Cost of Goods Sold.

The predetermined overhead rate based on direct labor cost is the ratio of estimated overhead cost to estimated direct labor cost for the period.

There are two basic types of cost accounting systems: job order costing and process costing.

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

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

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. -What is the ending Raw Materials Inventory balance for March?