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Exam 2: Job Order Costing and Analysis

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Question 61

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Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, the balance in the Factory Overhead account is a:

A) $330,000 Debit balance.
B) $170,000 Debit balance.
C) $10,000 Credit balance.
D) $340,000 Credit balance.
E) $10,000 Debit balance.

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Question 62

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Booth Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct material cost. At year-end, the Work in Process Inventory account shows the following. $\begin{array} { | l | l | c | r | r | } \hline \text { Date } & \text { Explanation } & \text { Debit } & \text { Credit } & \text { Balance } \\\hline \text { Dec. 31 } & \text { Direct materials cost } & 980,000 & & 980,000 \\\hline 31 & \text { Direct labor cost } & 320,000 & & 1,300,000 \\\hline 31 & \text { Overhead costs } & 637,000 & & 1,937,000 \\\hline 31 & \text { To finished goods } & & 1,818,000 & 119,000 \\\hline\end{array}$ a. Determine the overhead rate used (based on direct material cost). b. Only one job remained in the Work in Process inventory at December 31. Its direct materials cost is $60,000. How much direct labor cost and overhead cost are assigned to it?

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Question 63

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MOB Corp. maintains an internet-based general ledger. Overhead is applied on the basis of direct labor costs. Its bookkeeper accidentally deleted most of the entries that had been recorded for January. A printout of the general ledger (in T-account form) showed the following: A review of the prior year's financial statements, the current year's budget, and January's source documents produced the following information: (1) Accounts Payable is used for raw material purchases only. January purchases were $49,000. (2) Factory overhead costs for January were $17,000 none of which is indirect materials. (3) The January 1 balance for finished goods inventory was $10,000. (4) There was a single job in process at January 31 with a cost of $2,000 for direct materials and $1,500 for direct labor. (5) Total cost of goods manufactured for January was $90,000. (6) All direct laborers earn the same rate ($13/hour). During January, 2,500 direct labor hours were worked. (7) The predetermined overhead rate is based on direct labor costs. Budgeted (expected) overhead for the year is $195,000 and budgeted (expected) direct labor is $390,000. Fill in the missing amounts a through o above in the T-accounts above.

Time tickets for factory employees during the month of August are summarized as follows: Make the necessary journal entries to record factory payroll for direct and indirect labor.

Underapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. At year-end, the balance in the Factory Overhead account is a:

The journal entry to record the usage of Direct Materials includes a debit to Work in Process Inventory.

Job cost sheets are used to track all of the costs assigned to a job, including direct materials, direct labor, overhead, and all selling and administrative costs.

When Factory Wages Payable costs for labor are allocated in a job cost accounting system:

________, or customized production, produces products in response to customer orders.

A ________ accounting system records production activities using a perpetual inventory system.

Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Portside incurred a factory payroll 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 allocation of factory wages to production is:

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What is the ending Raw Materials Inventory balance for March?

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $3,200 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $1,400 and direct labor cost of $800. Therefore, the amount of the applied overhead is:

A perpetual record of a raw materials item that records data on the quantity and cost of units purchased, units issued for use in production, and units that remain in the raw materials inventory, is called a(n) :

Predetermined overhead rates are calculated before the start of the accounting period, and are therefore based on estimates.

Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee hour worked. Materials are assigned to each job according to actual cost. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the total cost that should be assigned to the job?

The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.

An example of direct labor cost is:

Finished goods inventory is $190,000. If overhead applied to these goods is $72,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?