Question 1

RC Corp.uses a job order cost accounting system.During the month of April, the following events occurred:
A.Purchased raw materials on credit, $32,000.
B.Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.
C.Paid factory payroll for the month totaling $37,700 which includes $8,200 indirect labor.
D.Assigned the factory payroll to jobs and overhead.
Make the necessary journal entries to record the above transactions and events.

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Question 2

Overhead is applied as a percent of direct labor costs.Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively.During the year, actual overhead was $107,400 and actual direct labor cost was $120,000.The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

Accepted Answer

Predetermined OH rate = $112,500/$125,000 = 90%;
OH applied = $120,000(.9) = $108,000
Applied $108,000 - Actual $107,400 = $600 overapplied (credit balance)

Question 3

Briefly describe how manufacturing firms dispose of overapplied or underapplied factory overhead.

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Question 4

Explain how a service firm, such as an advertising agency, might use job order costing.

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Question 5

Erlander Company uses a job order cost accounting system.On November 1, $15,000 of direct materials and $3,500 of indirect materials were requisitioned for production.Prepare the general journal entry to record this requisition.

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Question 6

The Terrapin Manufacturing Company has the following job cost sheets on file.They represent jobs that have been worked on during June of the current year.This table summarizes information provided on each sheet:
  a.What is the cost of the goods in process inventory on June 30?
b.What is the cost of the finished goods inventory on June 30?
c.What is the cost of goods sold for the month of June?

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Question 7

What is a cost accounting system? What are the two basic types of cost accounting systems?

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Question 8

How does job order cost accounting affect the company Astor and Black?

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Question 9

The Dina Corp.has applied overhead to jobs during the period as follows:  The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account, and this amount is not material.The entry to dispose of this remaining factory overhead balance is:

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Question 10

Describe how materials flow through a job order cost accounting system and identify the key documents in the system.

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Question 11

RC Corp.uses a job order cost accounting system.During the month of April, the following events occurred: 
A.Purchased raw materials on credit, $32,000.
B.Raw materials requisitioned: $25,800 as direct materials (Job 1:$4,200, Job 2: $7,500, Job 3: $3,600 and Job 4: $10,500)and $10,500 indirect materials.
C.Paid factory payroll for the month totaling $37,700 which includes $8,200 indirect labor.
D.Assigned the factory payroll to jobs and overhead.(Job 1:$7,000, Job 2: $9,800, Job 3: $3,000 and Job 4: $9,700)
E.Overhead was assigned at a rate of 50% of direct labor cost.
Determine the total cost of each job.

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Question 12

Key Manufacturing Co.applies factory overhead to production on the basis of direct labor costs.Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000.
A.If the $28,000 cost of Key's goods in process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included?
B.If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

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Question 13

Describe the flow of labor costs in a job order costing system and identify the documents used in the system.

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Question 14

The Johnson Manufacturing Company has the following job cost sheets on file.They represent jobs that have been worked on during March of the current year.This table summarizes information provided on each sheet:
  
A.What is the cost of goods sold for the month of March?
B.What is the cost of the goods in process inventory on March 31?
C.What is the cost of the finished goods inventory on March 31?

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Question 15

Describe the purpose of a job cost sheet and explain what information is found on the job cost sheet.

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Question 16

Explain what a predetermined overhead allocation rate is, how it is calculated, and why it is used.

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Question 17

A material amount of overapplied or underapplied overhead should be disposed of by allocating it to:

Accepted Answer

Overapplied or underapplied overhead should be allocated to goods in process, finished goods, and cost of goods sold in order to properly reflect the actual overhead costs incurred in the production process. Allocating it solely to one category would distort the costs of that category and give an inaccurate picture of the company's financial performance. Therefore, option C is the best choice as it allocates the over/under applied overhead to all three relevant categories.

Question 18

Overhead is applied as a percent of direct labor costs.Estimated overhead and direct labor costs for the year were $250,000 and $125,000, respectively.During the year, actual overhead was $248,000 and actual direct labor cost was $123,000.The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

Accepted Answer

Predetermined OH rate = $250,000/$125,000=200%
OH applied = $123,000(2.0) = $246,000
Applied $246,000 - Actual $248,000 =$2,000 underapplied (debit balance)

Question 19

Plumley Ad Agency contracted with a company to prepare an ad campaign.Plumley uses a job order costing system.Plumley estimates that the job will take 145 designer hours at $90 per hour and 85 staff hours at $45 per hour.Plumley uses two overhead rates in applying overhead to jobs: Designer-related at $100 per designer hour and staff-related at $50 per staff hour.Determine the total estimated cost for this job.

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Question 20

PRO, Inc.had the following activities during its most recent period of operations:
(a)Purchased raw materials on account for $140,000 (both direct and indirect materials are recorded in the Raw Materials Inventory account).
(b)Issued raw materials to production of $130,000 (80% direct and 20% indirect).
(c)Incurred and paid labor costs of $250,000 cash (70% direct and 30% indirect).
(d)Incurred factory utilities costs of $20,000; this amount is still payable.
(e)Applied overhead at 80% of direct labor costs.
(f)Recorded factory depreciation, $22,000.
Prepare journal entries to record the above transactions.

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Quiz 2: Job Order Costing and Analysis