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Exam 2: Job Order Costing and Analysis

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Question 91

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The Work in Process Inventory account of a manufacturing company has a $3,200 debit balance. The company applies overhead using direct labor cost. The cost sheet of the only job still in process shows direct material cost of $1,400 and direct labor cost of $800. Therefore, the amount of applied overhead is:

A) $1,800.
B) $2,200.
C) $1,000.
D) $800.
E) $2,400.

F) None of the above
G) C) and D)

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Question 92

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Job order costing would be used for all of the following except:

A) Construction of a custom home.
B) Production of running shoes.
C) Production of a Pixar movie.
D) Production of wedding invitations.
E) Conducting an audit.

F) A) and B)
G) D) and E)

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Question 93

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Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the application of factory overhead to production is:

Drop Anchor takes special orders to manufacture sail boats for high-end customers. Prepare journal entries to record the transactions below and prepare job cost sheets for September. a. Purchased raw materials on credit, $145,000. b. Materials requisitions: Job 240, $48,000; Job 241, $36,000; Job 242, $42,000; indirect materials were $12,000. c. Time tickets used to charge labor to jobs: Job 240, $40,000; Job 241, $30,000; Job 242, $35,000, indirect labor is $25,000. d. The company incurred the following additional overhead costs: depreciation of factory building, $70,000; depreciation of factory equipment, $60,000; expired factory insurance, $10,000; utilities and maintenance cost of $20,000 were paid in cash. e. Applied overhead to all three jobs. The predetermined overhead rate is 190% of direct labor cost. f. Transferred jobs 240 and 242 to Finished Goods Inventory. g. Sold job 240 for $300,000 for cash. h. Closed the under- or over-applied overhead account balance.

If actual overhead incurred during a period exceeds applied overhead, the difference will be a debit balance in the Factory Overhead account at the end of the period.

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the factory payroll is:

CWN Company uses a job order costing system and last period incurred $80,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor cost. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. If Minstrel incurred total overhead costs of $167,800 during the month, compute the amount of under- or overapplied overhead:

A manufacturing company applies overhead using direct labor cost. The company's Work in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of $3,000. What is the company's predetermined overhead rate?

The total manufacturing costs on job cost sheets for unfinished jobs equals the total amount in the Work in Process Inventory account in the general ledger.

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

Job order costing is used to determine the cost of producing each job or job lot.

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory. The cost of jobs transferred to finished goods is:

A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

A time ticket is a source document that an employee uses to report how much indirect labor was performed for a job.

A materials requisition is a source document used for recording materials received.

A job order costing system would be appropriate for a manufacturer of automobile tires.

The production activities for a customized product represent a(n) :

A company's ending inventory of finished goods has a cost of $45,000 and consists of 750 units. If the overhead applicable to these goods is $8,400, and overhead is applied at the rate of 60% of direct labor cost, what is the cost of the direct materials used to produce these units?

Portside Watercraft uses a job order costing system. During one month Portside purchased $153,000 of raw materials on credit; issued materials to production of $164,000, of which $24,000 were indirect. Portside incurred a factory payroll cost of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the application of factory overhead to production is: