Question 1

Match each following terms with their correct description from the items listed below.
-A costing system that accumulates production costs by process by department for a given period of time

Accepted Answer

Process-costing system is a costing system that accumulates production costs by process by department for a given period of time.

Question 2

Goodwin Company uses a normal job-order costing system. Currently, a plantwide overhead rate based on direct labour is used. Sarah Lindsay, the plant manager, has heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. Some jobs spend most of their time in Department A, while others spend most of their time in Department B. Goodwin Company has the following data for its two departments for the coming year: $\begin{array}{lrr}&\text { Department A }&\text { Department B }\
\text { Expected ov erhead cost } & \$ 75,000 & \$ 33,000 \
\text { Expected direct labour hours } & 30,000 & 24,000
\end{array}$ A. Compute the plantwide overhead rate.
B. Compute the departmental overhead rates. (Carry out your answers to three decimal places.)
C. Which overhead rate would you recommend, and why?

Accepted Answer

The answer of Goodwin Company uses a normal job-order costing...

Question 3

Match each following terms with their correct description from the items listed below.
-The difference between actual overhead and applied overhead

Accepted Answer

Overhead variance is the difference between actual overhead and applied overhead.

Answer: A
 Predetermined overhead rate is used to apply overhead to products and is calculated by dividing estimated total manufacturing overhead costs by estimated total allocation base.

Answer: B
 Plantwide overhead rate is calculated by dividing estimated total manufacturing overhead costs by estimated total allocation base across the entire plant.

Answer: C
 Departmental overhead rate is calculated separately for each department by dividing estimated total manufacturing overhead costs by estimated total allocation base for each department.

Answer: E
 Overapplied overhead occurs when applied overhead is greater than actual overhead.

Answer: F
 Underapplied overhead occurs when applied overhead is less than actual overhead.

Answer: G
 Applied overhead is the amount of manufacturing overhead assigned to products using the predetermined overhead rate.

Answer: H
 Normal cost of goods sold is the cost of goods sold, excluding any underapplied or overapplied overhead.

Question 4

Match each following terms with their correct description from the items listed below.
-The amount by which actual overhead exceeds applied overhead

Accepted Answer

Underapplied overhead occurs when the actual overhead costs are higher than the overhead costs that were applied to products or services, resulting in a shortfall that needs to be adjusted at the end of the accounting period.

Question 5

If actual overhead for the year is $33,451 and applied overhead is $32,000, is the overhead variance overapplied or underapplied? Prepare the journal entry necessary to reconcile overhead. Assume the variance is insignificant.

Accepted Answer

The answer of If actual overhead for the year is...

Question 6

Match each following terms with their correct description from the items listed below.
-Overhead assigned to production using predetermined rates

Accepted Answer

Applied overhead refers to the amount of overhead assigned to production using predetermined rates, which is calculated based on the predetermined overhead rate and the actual amount of the allocation base incurred.

Question 7

Match each following terms with their correct description from the items listed below.
-An approach that assigns the actual costs of direct materials and direct labour to products but uses a predetermined rate to assign overhead costs

Accepted Answer

Normal cost system assigns actual cost of direct materials and direct labor to products but uses a predetermined rate to assign overhead costs.

Question 8

The following information was taken from the job cost sheet for Job 101 for Scott Manufacturing Company:
Date started: July 5
Date completed: August 21 $\begin{array}{lccc}
&  \underline{\text { Direct }} &  \underline{\text { Direct }} & \underline{ \text { Factory }} \
 \underline{\text { Date } }& \underline{\text { Materials }} &  \underline{\text { Labour }} &  \underline{\text { Overhead }}\
\text { July 5 } & \$ 3,000 & & \
\text { July 15 } & & \$ 900 & \$ 450 \
\text { July 17 } & 1,500 & & \
\text { July 22 } & & 1,350 & 675 \
\text { August 1 } & 1,500 & & \
\text { August } 21 & & 600 & 300
\end{array}$
 Job 101 was sold on account on August 25 for 160% of its cost.
Required:
A. Prepare the journal entries to record the costs incurred for Job 101 in the current year for direct materials, direct labour, and manufacturing overhead (for simplicity, ignore the dates).
B. Prepare the journal entry to record the completion of Job 101.
C. Calculate the predetermined manufacturing overhead rate for Scott.
D. Prepare the journal entries to record the sale of Job 101.

Accepted Answer

The answer of The following information was taken from the...

Question 9

What are the three steps of overhead application?

Accepted Answer

The answer of What are the three steps of overhead...

Question 10

Steel Incorporated uses a job-order costing system and a predetermined overhead rate based on machine hours.
At the beginning of the year, the company estimated manufacturing overhead for the year would be $240,000 and machine hours would be 8,000.
The following information pertains to November of the current year: $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Job 10\quad\quad Job 11\quad\quad Job 12 } \quad \text { Total }$
$\text { Work-in-Process Inventory, Nov. } 1 \quad \$ 16,000 \quad \$ 26,000 \quad \$ 38,000 \quad \$ 80,000$ December production activity: $$\begin{array} { l r r r r } 
\text { Materials requisitioned } & \$ 4,000 & \$ 4,800 & \$ 7,200 & \$ 16,000 \
\text { Direct labour cost } & \$ 2,400 & \$ 3,600 & \$ 4,000 & \$ 10,000 \
\text { Machine hours } & 400 & 700 & 900 & 2,000 \
\text { Labour hours } & 120 & 180 & 200 & 500
\end{array}$$ Actual manufacturing overhead cost incurred in November was $61,000.
Required:
A. Compute the predetermined overhead application rate.
B. Determine the total cost associated with each job.
C. If Jobs 10 and 12 were completed, prepare the journal entry to move the cost.
D. If Job 10 was delivered to customers that paid $50,000 cash, prepare the journal entries.
E. Using the same assumption as D, calculate the gross profit for Job 10.
F. Using the same assumption as C, calculate the cost assigned to ending Work-in-Process Inventory.
G. Assuming no beginning Finished Goods Inventory and the same assumptions as A through F, calculate the cost assigned to ending Finished Goods Inventory.
H. How much was overhead overapplied or underapplied?

Accepted Answer

The answer of Steel Incorporated uses a job-order costing system...

Question 11

Kilo Company has a job-costing system. The following items appeared in the Work-in-Process Inventory account during January of the current year: $\begin{array}{lr}
\text { January } 1 \text { balance } & \$ 20,000 \
\text { Materials placed into production } & ? \
\text { Direct labour (4,000 hours) } & \$ 120,000 \
\text { Manufacturing ov erhead applied } & \$ 96,000 \
\text { Cost of goods manufactured } & \$ 400,000 \
\text { January 31 balance } & \$ 16,000
\end{array}$ Kilo applies overhead to production on the basis of direct labour hours. Job XX, the only job in process on January 31, has been charged $10,600 materials cost and has 100 labour hours of direct labour time assigned to it.
Required:
A. Determine the predetermined manufacturing overhead rate for Kilo Company.
B. Determine the amounts of materials, direct labour, and manufacturing overhead included in the January 31 Work-in-Process Inventory.
C. Determine the amount of materials placed into production during January.

Accepted Answer

The answer of Kilo Company has a job-costing system. The...

Question 12

A company has two departments that all goods pass through: machining and assembly. Machining overhead is applied based on machine hours, and assembly overhead is applied based on direct labour hours. Data on each department are as follows: $\begin{array}{lrr}&\text { Machining }&\text { Assembly }\
\text { Budgeted Overhead } & \$ 75,000 & \$ 40,000 \
\text { Budgeted Direct Labour Hours } & 5,000 & 10,000 \
\text { Budgeted Machine Hours } & 25,000 & 1,000 \
\text { Actual Overhead } & \$ 75,400 & \$ 39,200 \
\text { Actual Direct Labour Hours } & 5,203 & 9,980 \
\text { Actual Machine Hours } & 25,040 & 850
\end{array}$ A. Calculate the overhead rate for each department.
B. Calculate each department's applied overhead.
C. Calculate each department's overhead variance. Specify whether it is overapplied or underapplied.

Accepted Answer

The answer of A company has two departments that all...

Question 13

Sparkle Company produces ornamental trees and uses normal costing. Sparkle applies overhead based on direct labour hours. The following data are provided: $\begin{array}{lrr}&\text { Budgeted }&\text { Actual }\
\text { Overhead } & \$ 400,000 & \$ 392,000 \
\text { Machine Hours } & 20,000 & 18,000 \
\text { Direct Labour Hours } & 16,000 & 17,840 \
\text { Direct Materials Cost } & & \$ 521,000 \
\text { Direct Labour Cost } & & \$ 410,000 \
\text { Units Produced } & & 10,000
\end{array}$ A. Calculate applied overhead.
B. Calculate the unit cost.

Accepted Answer

The answer of Sparkle Company produces ornamental trees and uses...

Question 14

Giant Company is a job-order costing company that produces customized bicycles. During the month of October, Giant had three jobs in-process, Job 50cm, Job 56cm, and Job 60cm. By the end of the month, all three jobs had been completed, with Job 60cm being sold for $484.50. The following costs belong to each job: $\begin{array}{lrrr}&\text { Job } 50 \mathrm{~cm}&\text { Job } 56\mathrm{~cm}&\text { Job } 60 \mathrm{~cm}\
\text { Direct Materials } & \$ 90 & \$ 85 & \$ 95 \
\text { Direct Labour } & 100 & 110 & 95 \
\text { Applied Overhead } & 140 & 154 & 133 \
\text { Total }&\$330&\$349&\$323
\end{array}$ A. Overhead is applied based on direct labour dollars. Calculate the overhead rate.
B. What rate does Giant use to price its jobs?
C. Calculate the gross margin on Job 60cm.

Accepted Answer

The answer of Giant Company is a job-order costing company...

Question 15

Green Oak Farm Equipment is a job-order costing manufacturer that uses a plantwide overhead rate that is based on direct labour hours. Estimations for the year include $420,000 in overhead and 30,000 direct labour hours. Green Oak worked on five jobs in March. Data are as follows: $\begin{array}{lrrrrrr}&\text { Job } 89&\text { Job } 90&\text { Job } 91&\text { Job } 92&\text { Job } 93\
\text { Balance, 3/1 } & \$ 23,110 & \$ 18,240 & \$ 9,510 & \$  0 & \$0 \
\text { Direct Materials } & 13,000 & 17,210 & 22,900 & 15,240 & 8,210 \
\text { Direct Labour cost } & 8,075 & 11,500 & 16,250 & 9,750 & 4,860 \
\text { Direct Labour Hours } & 1,615 & 2,300 & 3,250 & 1,950 & 972
\end{array}$ By March 31, Jobs 89 and 91 were completed and sold. The rest of the jobs remained in process.
A. Calculate the plantwide overhead rate.
B. Calculate the Work-in-Process Inventory on March 31.
C. Calculate the Cost of Goods Sold for March.
D. Assume Green Oak marks up cost by 40%. What is the sales price of Jobs 89 and 91?

Accepted Answer

The answer of Green Oak Farm Equipment is a job-order...

Question 16

Match each following terms with their correct description from the items listed below.
-An overhead rate computed using estimated data

Accepted Answer

A refers to a predetermined overhead rate, which is calculated using estimated data.

Answer: B
 B refers to a plantwide overhead rate, which applies a single overhead rate to all products or services.

Answer: C
 C refers to a departmental overhead rate, which applies separate overhead rates to different departments.

Answer: D
 D refers to an overhead variance, which is the difference between actual overhead costs incurred and applied overhead costs.

Answer: E
 E refers to overapplied overhead, which occurs when actual overhead costs are less than applied overhead costs.

Answer: F
 F refers to underapplied overhead, which occurs when actual overhead costs are greater than applied overhead costs.

Answer: G
 G refers to applied overhead, which is the amount of overhead costs allocated to a specific product or service.

Answer: H
 H refers to the normal cost of goods sold, which is the cost of goods sold calculated using standard costing methods.

Question 17

Match each following terms with their correct description from the items listed below.
-A costing system in which costs are collected and assigned to units of production for each individual job

Accepted Answer

The job-order cost system is used when a company produces unique, custom-made products or when each unit of output is different from the next. The system tracks direct materials, direct labor, and overhead costs to specific jobs, allowing for the calculation of the total cost of each job. The other options listed are different costing systems used in different scenarios, but they do not match the description provided.

Question 18

Match each following terms with their correct description from the items listed below.
-An approach that assigns actual costs of direct materials, direct labour, and overhead to products

Accepted Answer

An approach that assigns actual costs of direct materials, direct labour, and overhead to products.

Question 19

Budgeted overhead is $40,000, budgeted direct labour hours are 2,000, actual overhead is $40,400, and direct labour hours are 3,230. Unadjusted Cost of Goods Sold is $140,800. Calculate the following:
A. Calculate the overhead variance.
B. Assuming the variance is insignificant, calculate adjusted Cost of Goods Sold.

Accepted Answer

The answer of Budgeted overhead is $40,000, budgeted direct labour...

Question 20

Langley Company provided the following data:
Budgeted overhead $100,000
Budgeted direct labour hours 10,000
Actual overhead $99,000
Actual direct labour hours 11,000
A. Calculate applied overhead.
B. Calculate the overhead variance. Is it overapplied or underapplied?

Accepted Answer

The answer of Langley Company provided the following data:
Budgeted overhead...

Quiz 5: Job-Order Costing

Match each following terms with their correct description from the items listed below. -A costing system that accumulates production costs by process by department for a given period of time

Match each following terms with their correct description from the items listed below. -The difference between actual overhead and applied overhead

Match each following terms with their correct description from the items listed below. -The amount by which actual overhead exceeds applied overhead

If actual overhead for the year is $33,451 and applied overhead is $32,000, is the overhead variance overapplied or underapplied? Prepare the journal entry necessary to reconcile overhead. Assume the variance is insignificant.

Match each following terms with their correct description from the items listed below. -Overhead assigned to production using predetermined rates

Match each following terms with their correct description from the items listed below. -An approach that assigns the actual costs of direct materials and direct labour to products but uses a predetermined rate to assign overhead costs

What are the three steps of overhead application?

Match each following terms with their correct description from the items listed below. -An overhead rate computed using estimated data

Match each following terms with their correct description from the items listed below. -A costing system in which costs are collected and assigned to units of production for each individual job

Match each following terms with their correct description from the items listed below. -An approach that assigns actual costs of direct materials, direct labour, and overhead to products

Langley Company provided the following data: Budgeted overhead $100,000 Budgeted direct labour hours 10,000 Actual overhead $99,000 Actual direct labour hours 11,000 A. Calculate applied overhead. B. Calculate the overhead variance. Is it overapplied or underapplied?