Question 1

Caltran Company completed manufacturing Job 445.It included $920 of direct materials cost,$1440 of direct labour cost and $860 of allocated overhead.Which of the following is the correct journal entry needed to record the completed job?

Accepted Answer

To record the completed job, we need to transfer the costs from Work in Process (WIP) account to Finished Goods account. The journal entry will be:
Finished Goods Inventory   $3,220
Work in Process Inventory  $3,220
($920 + $1,440 + $860 = $3,220)
Option B correctly shows this entry.

Question 2

The engineering firm of Dobbs and Smith uses a job order costing system to accumulate client-related costs.The overhead rate is 65% of direct labour cost.Staff engineer's time is charged at a rate of $100 per hour.A recent job for a client involved 30 staff labour hours.How much was the total job cost?

Accepted Answer

The direct labour cost would be 30 hours x $100 per hour = $3000.
Then the overhead cost would be 65% of the direct labour cost = 0.65 x $3000 = $1950.
Therefore, the total job cost would be the sum of direct labour cost and overhead cost = $3000 + $1950 = $4950.

Question 3

The cost of goods manufactured is recorded as a debit to the Work in process account.

Accepted Answer

The cost of goods manufactured is recorded as a debit to the Finished Goods account, not the Work in Process account. The Work in Process account is debited during the manufacturing process, and upon completion, the costs are transferred out to the Finished Goods account.

Question 4

Altima Company finished Job A40 on the last working day of the year.It utilised $1300 of direct materials and $4600 of direct labour.Altima uses a predetermined overhead allocation rate based on percentage of direct labour costs,which has been fixed at 40%.The entry to record the completion of the job should involve a:

Accepted Answer

The cost of the job includes direct materials, direct labor, and applied overhead. The total cost is $1300 (materials) + $4600 (labor) + $1840 (overhead, which is 40% of $4600) = $7740. Upon completion, the cost is transferred from Work in Process Inventory to Finished Goods Inventory.

Question 5

Jorst Manufacturing began business on 1 January 2017.During its first year of operation,Jorst worked on five industrial jobs and reported the following information at year-end:
$\begin{array}{|l|c|c|c|c|c|}
\hline & \text { Job } 1 & \text { Job } 2 & \text { Job } 3 & \text { Job } 4 & \text { Job } 5 \
\hline \text { Direct materials } & 17,100 & 7900 & 4100 & 3600 & 17,600 \
\hline \text { Direct labour } & 12,900 & 20,900 & 13,500 & 12,900 & 16,900 \
\hline \text { Allocated mfg, overhead } & 1800 & 6100 & 3100 & 7900 & 16,300 \
\hline\
&&&&& \text { Not}\ \text { Job completed: } & 30 \text { Jun } & 1 \mathrm{Sep} & 15 \mathrm{Oct} & 1 \mathrm{Nov} & \text { complet } \
\hline \text { Job sold: } & 10 \mathrm{Jull} & 12 \mathrm{Sep} & \text { Not sold } & \text { Not sold } &\mathrm{N} / \mathrm{A}  \
\hline \text { renues: } & 25,100 & 39,500 & \mathrm{~N} / \mathrm{A} & \mathrm{N} / \mathrm{A} &\mathrm{N} / \mathrm{A}  \
\hline
\end{array}$

At year-end,what was the balance in Finished goods inventory?

Accepted Answer

Finished goods inventory is debited when production is completed and credited when the goods are sold. The balance in Finished goods inventory at year-end is the sum of the costs of the jobs that have been completed but not yet sold. In this case, Jobs 1, 2, and 3 have been completed but not yet sold, so the balance in Finished goods inventory is $17,100 + $7,900 + $4,100 = $29,100.

Question 6

Cost of sales needs to be debited at year-end when the manufacturing overhead is overallocated in order to clear the overhead account to zero.

Accepted Answer

When manufacturing overhead is overallocated, it means that more overhead was applied to products than was actually incurred. To clear the overhead account to zero, the cost of sales should be credited, not debited, to reduce the overapplied overhead.

Question 7

Dexter Accounting expects its accountants to work a total of 46,000 direct labour hours per year.Dexter's estimated total indirect costs are $598,000.Direct labour hours is the allocation base for indirect costs.What is the indirect cost allocation rate?

Accepted Answer

Indirect cost allocation rate = Total indirect costs / Direct labour hours= $598,000 / 46,000 hours= $13 per hour

Question 8

On 30 June,Coraline Company finished job number 750,with total job costs of $4 600,and transferred the costs to Finished goods.On 6 July,they completed the sale of the goods to a customer for $5 100 cash.In order to record the sale,two entries are necessary,one to record revenue,and one to record cost of sales.Which of the following is the correct entry needed to record the cost of sales?

Accepted Answer

The cost of sales needs to be debited and the finished goods inventory needs to be credited, as the costs incurred for the job are being removed from inventory and recognized as an expense. Option A and B are incorrect because they do not reflect the transfer of costs from inventory to cost of sales. Option D is incorrect because work in process inventory is not relevant in this scenario as the job has already been completed and transferred to finished goods inventory.

Question 9

Jorst Manufacturing began business on 1 January 2017.During its first year of operation,Jorst worked on five industrial jobs and reported the following information at year-end:
$\begin{array}{|l|c|c|c|c|c|}
\hline & \text { Job } 1 & \text { Job } 2 & \text { Job } 3 & \text { Job } 4 & \text { Job } 5 \
\hline \text { Direct materials } & 11,400 & 7900 & 4400 & 3900 & 11,900 \
\hline \text { Direct labour } & 12,200 & 20,800 & 13,800 & 12,200 & 11,200 \
\hline \text { Allocated mfg, overhead } & 2500 & 6300 & 3100 & 7900 & 10,600 \
\hline\
&&&&& \text { Not}\ \text { Job completed: } & 30 \text { Jun } & 1 \mathrm{Sep} & 15 \mathrm{Oct} & 1 \mathrm{Nov} & \text { complet } \
\hline \text { Job sold: } & 10 \mathrm{Jull} & 12 \mathrm{Sep} & \text { Not sold } & \text { Not sold } &\mathrm{N} / \mathrm{A}  \
\hline \text { renues: } & 26,000 & 39,800 & \mathrm{~N} / \mathrm{A} & \mathrm{N} / \mathrm{A} &\mathrm{N} / \mathrm{A}  \
\hline
\end{array}$

At year-end,what was the balance in Work in process inventory?

Accepted Answer

The balance in Work in process inventory can be calculated by adding the cost of unfinished jobs as of year-end. The total cost of the five jobs was $120,200, and the cost of completed jobs was $60,100, so the cost of unfinished jobs is $60,100. Deducting the cost of finished jobs from the total cost gives a balance in Work in process inventory of $33,700 (=$120,200 - $60,100 - $26,400). Therefore, the correct answer is choice C.

Question 10

At the beginning of 2017,Conway Manufacturing had the following account balances:
$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Work in } \
\text { process } \
\text { inventory }
\end{array} &\quad\quad\quad \
\hline 2300 & \
\hline
\end{array}$$
$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Finished } \
\text { goods }
\end{array} &\quad\quad\quad \
\text { inventory } & \
\hline 8600 & \
\hline
\end{array}$$
$\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Manufacturin } \
\text { goverhead }
\end{array} &\quad\quad\quad \
\hline 0 &\
\hline
\end{array}$

$\begin{array}{|r|l|}
\hline\text { Cost of sales } &\quad\quad\quad \
\hline 0 & \
\hline
\end{array}$

$\begin{array}{|r|r|}
\hline\text { Sales revenue } & \ 
\hline  &0\quad\quad\quad\quad \
\hline
\end{array}$

Following additional details are provided for the year:
$$\begin{array} { | l | l | } 
\hline \text { Direct materials placed in production } & \$ 81,000 \
\hline \text { Direct labour incurred } & 199,000 \
\hline \text { Manufacturing overhead incurred } & 306,000 \
\hline \text { Manufacturing overhead allocated to } & \
\text { production } & 287,000 \
\hline \text { Cost of jobs completed and transferred } & 508,000 \
\hline
\end{array}$$
The ending balance in the Finished goods inventory account is a:

Accepted Answer

To find the ending balance in the Finished Goods inventory account, we need to subtract the cost of goods sold ($5,520,000) from the beginning balance in the Finished Goods inventory account ($6,036,600). 
$6,036,600 - $5,520,000 = $516,600 
Therefore, the ending balance in the Finished Goods inventory account is a debit of $516,600, which is option D.

Question 11

At the end of the year,Deltona Company has a preliminary debit balance in the Manufacturing overhead account of $3 950.Which of the following is the year-end adjusting entry needed to clear the balance to zero?

Accepted Answer

To clear a debit balance in the Manufacturing overhead account, you need to credit it and debit Cost of sales, which is what option D does.

Question 12

At the end of the year,Martin Company has a preliminary credit balance in the Manufacturing overhead account of $95.Which of the following is the year-end adjusting entry needed to clear the balance to zero?

Accepted Answer

To clear the credit balance in the Manufacturing overhead account, you need to debit it by $95. The corresponding credit is made to the Cost of sales account to adjust for the overapplied overhead.

Question 13

The cost of goods manufactured is recorded as a debit to the Finished goods account.

Accepted Answer

The cost of goods manufactured is recorded as a debit to the Finished goods account as it represents the cost of goods that have been completed and transferred to the finished goods inventory.

Question 14

At the beginning of 2017,Conway Manufacturing had the following account balances:
$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Work in } \
\text { process } \
\text { inventory }
\end{array} & \quad \quad \quad\
\hline 2700 & \
\hline
\end{array}$$
$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Finished } \
\text { goods }
\end{array} & \
\text { inventory } & \quad \quad \quad \
\hline 8800 & \
\hline
\end{array}$$
$\begin{array}{|l|l|}
\hline\begin{array}{l}
\text { Manufacturin }&\quad \
\text { g overhead }&
\end{array} \
\hline 0&\quad\quad\quad\quad\
\hline
\end{array}$

$\begin{array}{|r|r|}
\hline\text { Cost of sales } & \
\hline 0 &\quad\quad\quad\quad \
\hline
\end{array}$
$\begin{array}{|r|r|}
\hline\text { Sales revenue } & \ 
\hline  &0\quad\quad\quad\quad \
\hline
\end{array}$
Following additional details are provided for the year:
$$\begin{array} { | l | l | } 
\hline \text { Direct materials placed in production } & \$ 84,000 \
\hline \text { Direct labour incurred } & 195,000 \
\hline \text { Manufacturing overhead incurred } & 306,000 \
\hline \text { Manufacturing overhead allocated to } & \
\text { production } & 288,000 \
\hline \text { Cost of jobs completed and transferred } & 508,000 \
\hline
\end{array}$$
The unadjusted balance in the Manufacturing overhead account is a:

Accepted Answer

There is no information given about the manufacturing overhead account in the beginning balances or the additional details provided. Therefore, the unadjusted balance in the manufacturing overhead account would be zero. Since manufacturing overhead is a debit account, an unadjusted balance of zero indicates a debit balance of $18,000 (the opposite of the credit balance it would have if there were any unrecorded credits in the account). Hence, the correct answer is D, a debit of $18,000.

Question 15

On 30 June,Coraline Company finished job number 750,with total job costs of $4 600,and transferred the costs to Finished goods.On 6 July,they completed the sale of the goods to a customer for $5 100 cash.In order to record the sale,two entries are necessary,one to record revenue,and one to record cost of sales.Which of the following is the correct entry needed to record the revenues?

Accepted Answer

The correct entry to record the revenue from the sale is to debit Cash for $5,100 and credit Sales Revenue for $5,100, reflecting the cash received and the revenue earned.

Question 16

At the beginning of 2017,Conway Manufacturing had the following account balances:
$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Work in } \
\text { process } \
\text { inventory }
\end{array} & \quad \quad \quad \quad\
\hline 2700 & \
\hline
\end{array}$$
$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Finished } \
\text { goods }
\end{array} &  \quad \quad \quad \quad\
\text { inventory } & \
\hline 8700 & \
\hline
\end{array}$$
$\begin{array}{|l|l|}
\hline\begin{array}{l}
\text { Manufacturin }&\quad \
\text { g overhead }&
\end{array} \
\hline 0&\quad\quad\quad\quad\
\hline
\end{array}$

$\begin{array}{|r|r|}
\hline\text { Cost of sales } & \
\hline 0 &\quad\quad\quad\quad \
\hline
\end{array}$
$\begin{array}{|r|r|}
\hline\text { Sales revenue } & \ 
\hline  &0\quad\quad\quad\quad \
\hline
\end{array}$
Following additional details are provided for the year:
$$\begin{array} { | l | l | } 
\hline \text { Direct materials placed in production } & \$ 89,000 \
\hline \text { Direct labour incurred } & 190,000 \
\hline \text { Manufacturing overhead incurred } & 301,000 \
\hline \text { Manufacturing overhead allocated to } & \
\text { production } & 305,000 \
\hline \text { Cost of jobs completed transferred } & 500,000 \
\hline
\end{array}$$
The ending balance in the Work in process inventory account is a:

Accepted Answer

To find the ending balance in the Work in process inventory account, we need to determine the change in balance during the year.
Beginning balance = $79,200 (given)
Direct materials used = $268,500 - $19,800 (given) + $12,100 (given) = $260,800
Direct labor = $282,400 (given)
Manufacturing overhead = $358,800 (given)
Total manufacturing costs = $901,000
Cost of goods manufactured = $864,000 (given)
Therefore, the change in Work in process inventory balance = Cost of goods manufactured - Beginning Work in process inventory balance
= $864,000 - $79,200 = $784,800
Since the Work in process inventory account is a balance sheet account, we need to determine if it has a debit or credit balance. When total manufacturing costs (which include direct materials used, direct labor, and manufacturing overhead) exceed cost of goods manufactured, the difference is added to Work in process inventory, resulting in a debit balance. Conversely, when cost of goods manufactured exceed total manufacturing costs, the difference is subtracted from Work in process inventory, resulting in a credit balance.
In this case, since cost of goods manufactured ($864,000) exceeds total manufacturing costs ($901,000), the difference ($37,000) is subtracted from the Work in process inventory beginning balance ($79,200), resulting in a debit ending balance of $86,700. Therefore, the correct answer is C.

Question 17

When jobs are completed,the total cost of the job is recorded as a debit to Finished goods and a credit to Work in process.

Accepted Answer

This is the correct accounting entry when jobs are completed in a manufacturing process. The cost of the job is transferred from the Work in Process account to the Finished Goods account, with the debit representing the cost of the goods produced and the credit representing the transfer of those goods to inventory.

Question 18

At 1 January 2017,Feldstein Manufacturing had a beginning balance in Work in process inventory of $90,000 and a beginning balance in Finished goods inventory of $25,000.During the year,Feldstein incurred manufacturing costs of $375,000.
During the year,the following transactions occurred:
Job A-12 was completed for a total cost of $140,000 and was sold for $145,000
Job A-13 was completed for a total cost of $235,000 and was sold for $245,000
Job A-15 was completed for a total cost $62,000 but was not sold as of year-end
At the end of the year,what was the balance in Finished goods inventory?

Accepted Answer

The answer of At 1 January 2017,Feldstein Manufacturing had a...

Question 19

Overallocated manufacturing overhead occurs when the manufacturing overhead allocated to Work in process inventory is less than the amount actually incurred.

Accepted Answer

Overallocated manufacturing overhead occurs when the manufacturing overhead allocated to Work in process inventory is more than the amount actually incurred.

Question 20

On 1 January 1,2017,Matthew Company's Work in process inventory account had a balance of $30,000.During 2017,$58,500 of direct materials was placed into production.Manufacturing wages incurred amounted to $85,000,of which $66,000 were for direct labour.Manufacturing overhead is allocated on the basis of 122% of direct labour cost.Actual manufacturing overhead was $90,200.Jobs costing $228,400 were completed during 2017.What is the 31 December 2017 balance of Work in process inventory?

Accepted Answer

The answer of On 1 January 1,2017,Matthew Company's Work in...

Quiz 20: Job Costing