421603392 Job Order Costing Quizbowl PDF

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EASY ROUNDEASY 1Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job.Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: EasyEASY 2The following entry would ...

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EASY ROUND EASY 1 Job cost sheets contain entries for actual direct material, actual direct labor, and actual manufacturing overhead cost incurred in completing a job. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Easy EASY 2 The following entry would be used to record depreciation on manufacturing equipment:

Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 4 Level: Medium EASY 3 Including manufacturing overhead costs in product costs ensures that each product will earn a profit. Ans: False AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 5 Level: Medium EASY 4 A good description of “cost of goods manufactured” is the recorded cost of the: A) units completed during the period. B) units started and completed during the period. C) work done on all units during the period. D) work done this period on units completed this period. Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium EASY 5

In a job-order costing system, the cost of a completed but unsold job is: A) closed to Cost of Goods Sold. B) part of the Work in Process inventory balance. C) adjusted to exclude any applied overhead. D) part of the Finished Goods inventory balance. Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Medium EASY 6 The job cost sheet: A) summarizes all costs charged to a particular job. B) contains only direct costs such as direct materials and direct labor. C) is discarded after production is completed on a particular job. D) is useful only in process costing. Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium EASY 7 What source document is used to determine the actual amount of direct materials to record on a job cost sheet? A) bill of materials B) production order C) materials purchase order D) materials requisition form Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 2 Level: Medium EASY 8 In a predetermined overhead rate in a job-order costing system that is based on machine-hours, which of the following would be used in the numerator and denominator?

A) B) C) D)

Numerator Actual manufacturing overhead Actual manufacturing overhead Estimated manufacturing overhead Estimated manufacturing overhead

Denominator Actual machine-hours Estimated machine-hours Actual machine-hours Estimated machine-hours

Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting LO: 3 Level: Easy Source: CPA, adapted EASY 9 Elliott Company uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company manufactures tools to customer specifications. The following data pertain to Job 1501: Direct materials used........................................................ $4,200 Direct labor-hours worked................................................ 300 Direct labor rate per hour................................................. $8.00 Machine-hours used.......................................................... 200 Predetermined overhead rate per machine-hour............... $15.00 What is the total manufacturing cost recorded on Job 1501? B) $9,600 Ans: B AACSB: Analytic AICPA BB: Critical Thinking LO: 2,5 Level: Easy Source: CPA, adapted

AICPA FN: Reporting

Solution: Direct materials used........................................................................ $4,200 Direct labor (300 hours × $8.00 per hour)....................................... 2,400 Manufacturing overhead applied (200 hours × $15.00 per hour).... 3,000 Total manufacturing cost for job 1501............................................. $9,600 EASY 10 Heller Cannery, Inc., uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The company estimated that it would incur $510,000 in manufacturing overhead during the year and that it would work 100,000 machine-hours. The company actually worked 105,000 machine-hours and incurred $540,000 in manufacturing overhead costs. By how much was manufacturing overhead underapplied or overapplied for the year? B)

$4,500 underapplied

Ans: B AACSB: Analytic LO: 3,5,8 Level: Medium

AICPA BB: Critical Thinking Source: CPA, adapted

AICPA FN: Reporting

Solution:

Actual manufacturing overhead.......................................................

$540,000

Applied manufacturing overhead ($5.10 per DLH* × 105,000 DLHs)............................................ Manufacturing overhead underapplied............................................ *Predetermined overhead rate = $510,000 ÷ 100,000 machine-hours = $5.10 per machine-hour

535,500 $ 4,500

AVERAGE 1 186. Helmer Sporting Goods Company manufactured 100,000 units in 20X5and reported the following costs: Sandpaper Materials handling Coolants & lubricants Indirect manufacturing labor Direct manufacturing labor Direct materials, 1/1/X9 Finished goods, 1/1/X9 Finished goods, 12/31/X9 Work-in-process, 1/1/X9 Work-in-process, 12/31/X9

$

64,000 640,000 44,800 550,400 4,352,000 768,000 1,344,000 2,560,000 192,000 128,000

Leasing costs — plant $ 768,000 Depreciation — equipment 448,000 Property taxes — equipment 64,000 Fire insurance — equipment 32,000 Direct material purchases 6,272,000 Direct materials, 12/31/X9 550,400 Sales revenue 25,600,000 Sales commissions 1,280,000 Sales salaries 1,152,000 Advertising costs 960,000 Administration costs 1,600,000

Required: What is cost of goods sold for 20X9? Answer: a.

$384,000 + $3,136,000 – $275,200 = $3,244,800

b.

$3,244,800 + $2,176,000 + $32,000 + $320,000 + $22,400 + $275,200 + $384,000 + $224,000 + $32,000 + $16,000 = $6,726,400

c.

$6,726,400 + $96,000 – $64,000 = $6,758,400

d.

$6,758,400 + $672,000 – $1,280,000 = $6,150,400x2=12,300,800

Difficulty: 3

AVERAGE 2

Objectives : 6, 7

Terms to Learn:

cost of goods manufactured

Messinger Manufacturing Company had the following account balances for the quarter ending March 31, unless otherwise noted: Work-in-process inventory (January 1) Work-in-process inventory (March 31) Finished goods inventory (January 1) Finished goods inventory (March 31)

$ 70,200 85,500 270,000 255,000

Direct materials used Indirect materials used Direct manufacturing labor Indirect manufacturing labor

189,000 42,000 240,000 93,000

Property taxes on manufacturing plant building Salespersons' company vehicle costs Depreciation of manufacturing equipment Depreciation of office equipment

14,400 6,000 132,000 61,800

Miscellaneous plant overhead Plant utilities General office expenses Marketing distribution costs

67,500 46,200 152,700 15,000

Required: Prepare a cost of goods sold schedule for the quarter.

Answer: a.

Messinger Manufacturing Company Cost of Goods Manufactured Schedule For quarter ending March 31 Direct materials used Direct manufacturing labor Manufacturing overhead

$ 378,000 480,000

Depreciation of manufacturing equipment $264,000 Indirect manufacturing labor 186,000 Indirect materials 84,000 Miscellaneous plant overhead 135,000 Plant utilities 92,400 Property taxes on building 28,800 790,200 Manufacturing costs incurred $1,648,200 Add beginning work-in-process inventory 140,400 Total manufacturing costs $1,788,600 Less ending work-in-process inventory 171,000 Cost of goods manufactured $1,617,600 b.

Messinger Manufacturing Company Cost of Goods Sold Schedule For the quarter ending March 31 Beginning finished goods inventory $ 540,000 Cost of goods manufactured 1,617,600 Cost of goods available for sale 2,157,600 Ending finished goods inventory (510,000) Cost of goods sold $1,647,600 /2 823,800

Difficulty: 2

Objectives : 6, 7

Terms to Learn:

cost of goods manufactured

AVERAGE 3 Teddy Company is to submit a bid on the production of 5,500 vases. It is estimated that the cost of materials will be $8,500, and the cost of direct labor will be $12,000. Factory overhead is applied at 50% of direct labor cost in the Molding Department and at $7.50 per direct labor hour in the Finishing Department. Of the above direct labor, it is estimated that 500 direct labor hours at a cost of $4,000 will be required in Finishing. The company wishes a markup of 100% of its total production cost.

Determine the following (1) Estimated prime cost and (2) Estimated conversion cost.

SOLUTION (1)

Materials....................................................................................................... Direct labor................................................................................................... Factory overhead: Molding (50% x $8,000)......................................................................... Finishing (500 DLH x $7.50).................................................................. Estimated cost to produce...........................................................................

$ 8,500 12,000 4,000 3,750 $ 28,250

(2)

Materials....................................................................................................... Direct labor................................................................................................... Estimated prime cost...................................................................................

$ 8,500 12,000 $ 20,500

(3)

Direct labor................................................................................................... Factory overhead.......................................................................................... Estimated conversion cost...........................................................................

$ 12,000 7,750 $ 19,750

(4)

Estimated cost to produce........................................................................... Markup ($28,250 x 100%)........................................................................... Bid price........................................................................................................

$ 28,250 28,250 $ 56,500

AVERAGE 4 The work in process account of Meyers Company showed:

Materials Direct labor Factory overhead

Work in Process $22,000 | Finished goods 37,000 | 55,500 |

$68,000

Materials charged to the one job still in process amounted to $5,000. Factory overhead is applied as a predetermined percentage of direct labor cost. Compute the following (1) the amount of direct labor cost in finished goods and (2) the amount of factory overhead in finished goods.

SOLUTION

(1)

The amount of direct labor in finished goods: Finished goods................................................................................................... Materials included in finished goods............................................................... Direct labor and factory overhead in finished goods.....................................

$68,000 17,000 $51,000

Factory overhead charged to work in process lb

h

d

k

$55,500 = 1.5 = $37 000

Let x = direct labor in finished goods 2.5x = $51,000 direct labor and factory overhead in finished goods x = $20,400 direct labor in finished goods (2)

The amount of factory overhead in finished goods:

x = $20,400 1.5x = 1.5($20,400) 1.5x = $30,600 factory overhead in finished goods AVERAGE 5 The Watson Tool Corporation, which commenced operations on August 1, employs a job order costing system. Overhead is charged at a normal rate of $2.50 per direct labor hour. The actual operations for the month of August are summarized as follows: a.

Purchases of raw material, 25,000 pieces @ $1.20/piece.

b.

Material and labor costs charged to production:

Job No. 101 102 103 104 105

c.

Units 10,000 8,800 16,000 8,000 20,000

Material $4,000 3,600 7,000 3,200 8,000

Direct labor cost $6,000 5,400 9,000 4,800 3,600

Direct labor hours 3,000 2,700 4,500 2,400 1,800

Actual overhead costs incurred: Variable Fixed

$18,500 15,000

d.

Completed jobs: 101, 102, 103, and 104

e.

Sales—$105,000. All units produced on Jobs 101, 102, and 103 were sold.

Required: Compute Cost of goods sold after Under- or overapplied overhead

ANSWER: a.

$30,000 – ($4,000 + $3,600 + $7,000 + $3,200 + $8,000) = $4,200

b.

Job #105 $8,000 + $3,600 + ($1,800 × 2.50) = $16,100

c.

Job #104 $3,200 + $4,800 + ($2,400 × 2.50) = $14,000

d.

Job # 101 $4,000 + $6,000 + ($3,000 × 2.50) = $17,500 102 $3,600 + $5,400 + ($2,700 × 2.50) = 15,750 103 $7,000 + $9,000 + ($4,500 × 2.50) 27,250 $60,500

e.

Applied 14,400 × $2.50 = $36,000 Actual 33,500 Overapplied $ 2,500

AVERAGE 6 The Palmer Company had the following inventories at the beginning and end of July:

Materials........................................................................................... Work in process................................................................................ Finished goods..................................................................................

July 1 $20,000 ? 65,000

July 31 $ 45,000 185,000 115,000

During July, the cost of materials purchased was $160,000 and factory overhead of $125,000 was applied at a rate of 75% of direct labor cost. July cost of goods sold was $240,000. Required: Prepare completed T accounts showing the flow of the cost of goods manufactured and sold. SOLUTION

Inv. Purch. 45,000

Materials 20,000 Inv. 160,000 | 180,000 | | | | |

48,333

Work in Process | WIP135,000 ** | FG Materials 135,000 | Factory | overhd. 125,000 | Labor 166,667 | 475,000 | 185,000 |

Finished Goods Inv.

65,000

| CGS

Cost of Goods Sold 240,000

FG

240,000

|

290,000

WIP 115,000

290,000* | 355,000 | |

| | |

CGA-Canada (adapted). Reprinted with permission. *Beginning inventory + WIP = Ending inventory + CGS $65,000 + WIP = $115,000 + $240,000 WIP = $290,000 **Beginning WIP + Mfg. costs = Ending WIP + FG Beginning WIP + $426,667 = $185,000 + $290,000 Beginning WIP = $48,333 AVERAGE 7 Job Order Cost Sheet; Over- or Underapplied Overhead. During June, the following transactions took place at the Cassandran Corp. June 3 5

7 8 10 14

Purchased materials, $30,000. Requisitioned materials from inventory, $20,000 (75% of these were direct; 25% were indirect). Direct materials of $3,000 and indirect materials of $1,000 were for Job 00-1. The remainder were for Job 00-2. For Job 00-2, returned $150 of direct materials and $200 of indirect materials. Recorded liabilities for payroll: direct labor, $15,000 and indirect labor, $5,000. Of the direct labor cost, 60% was for Job 00-1; the remainder was for Job 00-2. Incurred other factory overhead costs, $20,000 (all applicable to Jobs 00-1 and 00-2). Applied overhead at the rate of 200% of direct labor cost to Jobs 00-1 and 00-2, which were completed and transferred to finished goods account today.

Required: Assuming that Jobs 00-1 and 00-2 were the only jobs during the period and that all overhead (as recorded above) is the total applicable overhead for these projects, determine the difference between applied and actual overhead for the month.

SOLUTION (1) Materials................................................................................................. Labor...................................................................................................... Overhead applied.................................................................................. Total cost................................................................................................. (2) Analysis of Factory Overhead Incurred: Indirect materials............................................................................. Indirect labor.................................................................................... Other overhead incurred................................................................. Applied: Job 00-1............................................................................................. Job 00-2............................................................................................. Amount overapplied .............................................................................

Job 00-1 $ 3,000 9,000 18,000 $ 30,000

Job 00-2 $ 11,850 6,000 12,000 $ 29,850

$ 4,800 5,000 20,000

$ 29,800

$ 18,000 12,000 $

30,000 (200 )

192. The following calendar year information about the Tchulahota Corporation is available on December 31: Advertising expense…………………………… $ 28,800 Depreciation of factory equipment…………… 42,320 Depreciation of office equipment…………….. 10,800 Direct labor…………………………………… 142,600 Factory utilities………………………………... 35,650 Interest expense………………………………... 6,650 Inventories, January 1: Raw materials…………………………… Work in Process………………………… Finished goods…………………………... Inventories, December 31: Raw materials…………………………….. Work in Process………………………….. Finished goods…………………………… Raw materials purchases……………………… Rent on factory building……………………… Indirect labor…………………………………..

3,450 17,250 35,600 2,300 20,700 31,050 132,450 41,400 51,750

Sales commissions……………………………..

16,500

The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead. Answer: Factory overhead costs: Depreciation of factory equipment …………… Factory utilities ……………………………….. Rent on factory building ……………………… Indirect labor ………………………………….. Total actual factory overhead costs …………..

$ 42,320 35,650 41,400 51,750 $171,120

Factory overhead applied (142,600 * 125%) … Overapplied overhead …………………………

$178,250 $ 7,130

AVERAGE 9 The predetermined overhead rate for Shilling Manufacturing is based on estimated direct labor costs of $350,000 and estimated factory overhead of $770,000. Actual costs incurred were: Direct materials ............................................................ $475,000 Direct labor................................................................... 347,000 Indirect materials.......................................................... 78,000 Indirect labor ................................................................ 143,500 Sales commissions ....................................................... 150,000 Factory depreciation..................................................... 260,000 Property taxes, factory ................................................. 35,000 Factory utilities ............................................................ 65,000 Advertising................................................................... 62,500 Factory supervision ...................................................... 185,000 a. Calculate the predetermined overhead rate and calculate the overhead applied during the year. b. Determine the amount of o...