Question 1

Manufacturing overhead is applied to each job

Accepted Answer

Manufacturing overhead is applied to each job by means of a predetermined overhead rate. This rate is calculated at the beginning of the period based on estimated overhead costs and estimated activity levels. It is then used to allocate overhead costs to individual jobs based on the actual level of activity incurred by each job.

Question 2

Overhead application is recorded with a

Accepted Answer

Overhead application involves allocating the manufacturing overhead costs to the products being produced. This is done by debiting the Work in Process Inventory account and crediting the Manufacturing Overhead account, reflecting the transfer of overhead costs from an accumulated cost account to the products being manufactured.

Question 3

In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to

Accepted Answer

In automated manufacturing operations, machine hours are usually the most realistic and appropriate activity base to use because machines are used extensively in automation. The amount of machine time used is directly proportional to the overhead cost incurred, which makes it an appropriate activity base for determining the predetermined overhead rate.

Question 4

A company expected its annual overhead costs to be $1,500,000 and direct labor costs to be $1,000,000. Actual overhead was $1,450,000, and actual labor costs totaled $1,100,000. How much is the company's predetermined overhead rate to the nearest cent?

Accepted Answer

The predetermined overhead rate is calculated by dividing the expected overhead costs by the expected direct labor costs. So, $1,500,000 / $1,000,000 = $1.50.

Question 5

Norman Company manufactures customized desks. The following pertains to Job No. 953: $\begin{array}{lr}
\text { Direct materials used } & \$ 22,800 \
\text { Direct labor hours worked } & 600 \
\text { Direct labor rate per hour } & \$ 16.00 \
\text { Machine hours used } & 400 \
\text { Applied factory overhead rate per machine hour } & \$ 30.00
\end{array}$ What is the total manufacturing cost for Job No. 953?

Accepted Answer

The answer of Norman Company manufactures customized desks. The following...

Question 6

Kinney Company applies overhead on the basis of 150% of direct labor cost. Job No. 176 is charged with $150,000 of direct materials costs and $180,000 of manufacturing overhead. The total manufacturing costs for Job No. 176 is

Accepted Answer

Direct labor cost can be calculated by subtracting direct material cost from total manufacturing costs: 
Direct labor cost = Total manufacturing costs - Direct material cost
Using the overhead application rate given in the problem, we can calculate the manufacturing overhead applied to Job No. 176: 
Manufacturing overhead applied = 150% x Direct labor cost
Manufacturing overhead applied = 1.5 x ($180000 - $150000) = $45000
Therefore, the total manufacturing costs for Job No. 176 is: 
Total manufacturing costs = Direct materials cost + Direct labor cost + Manufacturing overhead applied
Total manufacturing costs = $150000 + ($180000 - $150000) + $45000 = $450000

Question 7

Redman Company manufactures customized desks. The following pertains to Job No. 978: $\begin{array}{lr}
\text { Direct materials used } & \$ 15.450 \
\text { Direct labor hours worked } & 360 \
\text { Direct labor rate per hour } & \$ 15.00 \
\text { Machine hours used } & 300 \
\text { Applied factory overhead rate per machine hour } & \$ 22.00
\end{array}$ What is the total manufacturing cost for Job No. 978?

Accepted Answer

The answer of Redman Company manufactures customized desks. The following...

Question 8

If annual overhead costs are expected to be $750,000 and direct labor costs are expected to be $1,000,000, then if the activity base is direct labor costs:

Accepted Answer

The answer of If annual overhead costs are expected to...

Question 9

Minton Company provided the following information from its accounting records for 2017: $\begin{array}{lr}
\text { Expected production } & 60,000 \text { labor hours } \
\text { Actual production } & 56,000 \text { labor hours } \
\text { Budgeted overhead } & \$ 1,800,000 \
\text { Actual overhead } & \$ 1,740,000
\end{array}$ How much is the overhead application rate if Minton Company bases it on direct labor hours?

Accepted Answer

The answer of Minton Company provided the following information from...

Question 10

The predetermined overhead rate is

Accepted Answer

The predetermined overhead rate is calculated at the beginning of the year by dividing the estimated total overhead costs by the estimated level of activity (such as machine hours or direct labor hours). This rate is then used to apply overhead costs to products throughout the year, even though the actual overhead costs may vary.

Question 11

Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?

Accepted Answer

The answer of Manufacturing overhead applied is added to direct...

Question 12

Henson Company applies overhead on the basis of 120% of direct labor cost. Job No. 190 is charged with $140,000 of direct materials costs and $180,000 of manufacturing overhead. The total manufacturing costs for Job No. 190 is

Accepted Answer

To find the total manufacturing cost for Job No. 190, we need to use the formula:

Total Manufacturing Cost = Direct Materials Cost + Direct Labor Cost + Manufacturing Overhead Cost

We are given the direct materials cost ($140,000) and the manufacturing overhead cost ($180,000). However, we need to find the direct labor cost before we can calculate the total manufacturing cost.

To do this, we can use the overhead rate of 120% of direct labor cost. We know that the manufacturing overhead cost is 120% of the direct labor cost, so we can set up the following equation:

$180,000 = 120% x Direct Labor Cost

Solving for Direct Labor Cost, we get:

Direct Labor Cost = $180,000 / 1.2 = $150,000

Now we can calculate the total manufacturing cost for Job No. 190:

Total Manufacturing Cost = $140,000 + $150,000 + $180,000 = $470,000

Therefore, the correct answer is D.

Question 13

The predetermined overhead rate is based on the relationship between

Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated annual overhead costs by the expected annual activity level (such as direct labor hours or machine hours). This relationship between estimated costs and expected activity is used to apply overhead to products or services during the period.

Question 14

Vektek, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $2,050,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $2,100,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12?

Accepted Answer

The answer of Vektek, Inc. thinks machine hours is the...

Question 15

The labor costs that have been identified as indirect labor should be charged to

Accepted Answer

Indirect labor costs, such as salaries of supervisors or maintenance workers who do not directly work on the production of a particular product, are considered manufacturing overhead expenses and should be allocated to the cost of the products being manufactured.

Question 16

Simmons Inc. applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 250, the only job still in process at the end of August, has been charged with manufacturing overhead of $8,100. What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $30,000?

Accepted Answer

Using the predetermined overhead rate formula:

Predetermined overhead rate = Estimated manufacturing overhead cost / Estimated direct labor cost

We know that the predetermined overhead rate = 90%

So,

90% = Estimated manufacturing overhead cost / Estimated direct labor cost

Estimated manufacturing overhead cost = 0.9 x Estimated direct labor cost

We don't know the estimated direct labor cost, but we know that Job 250 has been charged with manufacturing overhead of $8,100. This manufacturing overhead cost was applied at a rate of 90% based on the direct labor cost. Therefore, we can calculate the direct labor cost for Job 250 as follows:

Direct labor cost = Manufacturing overhead cost applied / Predetermined overhead rate

Direct labor cost = $8,100 / 0.9 = $9,000

We also know that the balance in the Work in Process inventory is $30,000. This balance includes both direct materials and direct labor costs for Job 250, as well as any manufacturing overhead costs that have been applied.

To find the amount of direct materials charged to Job 250, we need to subtract the direct labor cost and manufacturing overhead cost from the Work in Process balance:

Direct materials cost = Work in Process balance - Direct labor cost - Manufacturing overhead cost

Direct materials cost = $30,000 - $9,000 - $8,100 = $12,900

Therefore, the amount of direct materials charged to Job 250 is $12,900.

Question 17

Spencer Inc. applies overhead to production at a predetermined rate of 80% based on direct labor cost. Job No. 130, the only job still in process at the end of August, has been charged with manufacturing overhead of $6,400. What was the amount of direct materials charged to Job 130 assuming the balance in Work in Process inventory is $20,000?

Accepted Answer

To find the direct materials charged to Job 130, we need to use the following formula:

Total manufacturing costs = Direct materials + Direct labor + Manufacturing overhead

We know that the manufacturing overhead charged to Job 130 is $6,400 and that the predetermined overhead rate is 80% based on direct labor cost. This means that the total amount of direct labor cost for Job 130 is:

Total manufacturing overhead / Predetermined overhead rate = $6,400 / 0.8 = $8,000

We also know that the balance in Work in Process inventory is $20,000. This means that the total manufacturing costs for Job 130 (including the costs incurred to date and the remaining costs) is:

Total manufacturing costs = Balance in Work in Process inventory + Manufacturing costs incurred to date
Total manufacturing costs = $20,000 + $6,400 = $26,400

We can now use the formula to find the direct materials charged to Job 130:

Direct materials = Total manufacturing costs - Direct labor - Manufacturing overhead
Direct materials = $26,400 - $8,000 - $6,400 = $11,000

Therefore, the amount of direct materials charged to Job 130 is $5,600 (choice C).

Question 18

Simpson Company applies overhead on the basis of 200% of direct labor cost. Job No. 305 is charged with $180,000 of direct materials costs and $200,000 of manufacturing overhead. The total manufacturing costs for Job No. 305 is:

Accepted Answer

The total manufacturing costs for Job No. 305 include direct materials, direct labor, and manufacturing overhead. Given that the manufacturing overhead is 200% of direct labor cost, we can calculate the direct labor cost as $200,000 / 200% = $100,000. Therefore, the total manufacturing costs are $180,000 (direct materials) + $100,000 (direct labor) + $200,000 (manufacturing overhead) = $480,000.

Question 19

For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $600,000 of factory labor costs are incurred of which $140,000 is indirect labor. Actual overhead incurred was $320,000. The amount of overhead debited to Work in Process Inventory should be:

Accepted Answer

The answer of For Jacobs Company, the predetermined overhead rate...

Question 20

Barr Mfg. provided the following information from its accounting records for 2017: $\begin{array}{lr}
\text { Expected production } & 60,000 \text { labor hours } \
\text { Actual production } & 56,000 \text { labor hours } \
\text { Budgeted overhead } & \$ 900,000 \
\text { Actual overhead } & \$ 870,000
\end{array}$ How much is the overhead application rate if Barr bases the rate on direct labor hours?

Accepted Answer

The answer of Barr Mfg. provided the following information from...

Quiz 14: Job Order Costing