Question 1

Jinnah Company applies overhead on the basis of 200% of direct labor cost. Job No. 501 is charged with $240000 of direct materials costs and $320000 of manufacturing overhead. The total manufacturing costs for Job No. 501 is

Accepted Answer

- The formula to calculate manufacturing costs is:
Manufacturing Costs = Direct Materials + Direct Labor + Manufacturing Overhead
- We know Direct Materials costs is $240,000
- We don't know Direct Labor costs, but we know that Manufacturing Overhead is charged at 200% of Direct Labor costs. We can use this information to find the Direct Labor cost:
Manufacturing Overhead = 200% x Direct Labor
$320,000 = 2 x Direct Labor
Direct Labor = $160,000
- To find the total manufacturing costs for Job No. 501, we can apply the formula:
Manufacturing Costs = $240,000 + $160,000 + $320,000
Manufacturing Costs = $720,000
Therefore, the best choice is C, with an explanation as shown above.

Question 2

Colby Company estimates that annual manufacturing overhead costs will be $600000. Estimated annual operating activity bases are: direct labor cost $460000 direct labor hours 40000 and machine hours 80000. The actual manufacturing overhead cost for the year was $601000 and the actual direct labor cost for the year was $456000. Actual direct labor hours totaled 39800 and machine hours totaled 79000. Colby applies overhead based on direct labor hours.
Instructions
Compute the predetermined overhead rate and determine the amount of manufacturing overhead applied. Determine if overhead is over- or underapplied and the amount.

Accepted Answer

The answer of Colby Company estimates that annual manufacturing overhead...

Question 3

Which of the following statements about under- or overapplied manufacturing overhead is correct?

Accepted Answer

After the entry to transfer over- or underapplied overhead to Cost of Goods Sold is posted, Manufacturing Overhead will have a zero balance. This is because the over or underapplied amount is transferred to Cost of Goods Sold as an adjustment.

Question 4

During 2016 Arb Company incurred the following direct labor costs: January $20000 and February $30000. Arb uses a predetermined overhead rate of 120% of direct labor cost. Estimated overhead for the 2 months respectively totaled $19500 and $35700. Actual overhead for the 2 months respectively totaled $25000 and $33500.
Instructions
Determine if overhead is over- or underapplied for each of the two months and the respective amounts.

Accepted Answer

The answer of During 2016 Arb Company incurred the following...

Question 5

$\begin{array}{l}
\text { Lando Company reported the following amounts for } 2016 \text { : }\
\begin{array} { l r l r } 
\text { Raw materials purchased } & \$ 83,000 & \text { Ending work in process inventory } & \$ 6,300 \
\text { Beginning raw materials inventory } & 5,200 & \text { Manufacturing overhead costs applied } & 36,000 \
\text { Ending raw materials inventory } & 4,500 & \text { Beginning work in process inventory } & 6,100
\end{array}
\end{array}$Instructions
Calculate the cost of materials used in production

Accepted Answer

The answer of \(\begin{array}{l}
\text { Lando Company reported the following...

Question 6

Usually under- or overapplied overhead is considered to be an adjustment to

Accepted Answer

Under- or overapplied overhead is typically adjusted against the cost of goods sold to reflect the actual cost incurred during production.

Question 7

When the company assigns factory labor costs to jobs the direct labor cost is debited to

Accepted Answer

Direct labor costs are debited to Work in Process Inventory as they are directly associated with the production of goods.

Question 8

At December 31 Ding Company reported the following balances in its accounts: $\begin{array}{lr}
\text { Cost of Goods Sold } & \$ 210,000 \
\text { Finished Goods Inventory } & 30,000
\end{array}$ The company's balance in its Manufacturing Overhead account at the same date was a debit of $2800.
Instructions
Prepare the entry to adjust the over- or underapplied overhead amount at December 31.

Accepted Answer

The answer of At December 31 Ding Company reported the...

Question 9

Overapplied manufacturing overhead exists when overhead assigned to work in process is

Accepted Answer

Overapplied manufacturing overhead occurs when the overhead assigned to work in process exceeds the actual overhead incurred, resulting in a credit balance in the Manufacturing Overhead account at the end of the period.

Question 10

In January Harlan Inc. production supervisor requisitioned raw materials for production as follows: Job 1 $700 Job 2 $900 Job 3 $400 and general factory use $520.
Instructions
Prepare a summary journal entry to record raw materials used.

Accepted Answer

The answer of In January Harlan Inc. production supervisor requisitioned...

Question 11

In a job order cost system it would be correct in recording the purchase of raw materials to debit

Accepted Answer

The purchase of raw materials should be recorded by debiting Raw Materials Inventory, as this will increase the inventory account for raw materials. The cost of the raw materials will eventually be transferred to the Work in Process Inventory account once they are requisitioned for use in production.

Question 12

Martin Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year follows: $\begin{array}{lr}
\text { Actual manufacturing overhead } & \$ 150,000 \
\text { Estimated manufacturing overhead } & \$ 145,000 \
\text { Direct labor hours incurred } & 4,800 \
\text { Direct labor hours estimated } & 5,000
\end{array}$ Instructions
Compute the predetermined overhead rate.

Accepted Answer

The answer of Martin Company applies manufacturing overhead based on...

Question 13

During the first year of operations Shapiro Tool accumulated the following manufacturing costs:
$\begin{array}{lr}
\text { Raw materials purchased on account } & \$ 12,000 \
\text { Factory labor accrued } & 6,000 \
\text { Incurred manufacturing overhead on account } & 4,000
\end{array}$
Instructions
Prepare separate journal entries for each manufacturing cost.

Accepted Answer

The answer of During the first year of operations Shapiro...

Question 14

The following amounts were reported by Burke Company before adjusting its immaterial overapplied manufacturing overhead of $8000. $\begin{array}{lr}
\text { Raw Materials Inventory } & \$ 40,000 \
\text { Finished Goods Inventory } & 60,000 \
\text { Work in Process Inventory } & 100,000 \
\text { Cost of Goods Sold } & 730,000
\end{array}$ Instructions
Compute what amount Burke will report as cost of goods sold after it disposes of its overapplied overhead.

Accepted Answer

The answer of The following amounts were reported by Burke...

Question 15

Companies assign manufacturing overhead to work in process on an estimated basis through the use of a(n)

Accepted Answer

Companies assign manufacturing overhead to work in process on an estimated basis through the use of a predetermined overhead rate. This rate is calculated by dividing the estimated total overhead costs for the period by an estimated level of activity, such as machine hours or labor hours. This allows for a more accurate allocation of overhead costs to the products being produced.

Question 16

The manufacturing operations of Bryant Inc. had the following balances for the month of January: $\begin{array}{lrr}
\text { Inventories } &\text { January } 1 & \text { January } 31\
\text { Raw materials } & \$ 12,000 & \$ 13,000 \
\text { Work in process } & 21,000 & 23,000 \
\text { Finished goods } & 14,000 & 16,000
\end{array}$
 Bryant transferred $290000 of completed goods out of work in process during January.
Instructions
Compute the cost of goods sold.

Accepted Answer

The answer of The manufacturing operations of Bryant Inc. had...

Question 17

Which of the following is not a control account?

Accepted Answer

The answer of Which of the following is not a...

Question 18

A process cost system would be used for all of the following except the

Accepted Answer

A process cost system is used when a large number of identical or similar products are produced in a continuous manner, with costs accumulated by process or department. The printing of wedding invitations is a job order costing system because each job is unique and made to order. Thus, the best choice is C.

Question 19

In a manufacturing company the cost of factory labor consists of all of the following except

Accepted Answer

The cost of factory labor consists of the gross earnings of factory workers (wages/salaries) as well as any employer payroll taxes and fringe benefits incurred by the employer. However, the net earnings of factory workers (what they take home after taxes and deductions) do not factor into the cost of factory labor for the employer.

Question 20

Builder Bug Company allocates overhead at $9 per direct labor hour. Job A45 required 4 boxes of direct materials at a cost of $30 per box and took employees 20 hours to complete. Employees earn $15 per hour.
Instructions
Compute the total cost of Job A45.

Accepted Answer

The answer of Builder Bug Company allocates overhead at $9...

Quiz 20: Job Order Costing