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Exam 2: Job Order Costing and Analysis

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Question 51

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A company that produces a large number of standardized units would normally use a job order costing system.

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Question 52

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Predetermined overhead rates are calculated at the end of the accounting period once the actual amount of factory overhead is known.

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Question 53

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The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units?

The balance in the Work in Process Inventory at any point in time equals

There should be a "cause and effect" relation between the overhead allocation base and overhead costs.

When actual overhead cost exceeds the overhead applied, overhead is said to be overapplied.

Labor costs in production can be:

Calwell Corp. uses a job order costing system. Four jobs were started during the current year. The following is a record of the costs incurred: Actual overhead costs were $55,800. The predetermined overhead rate is $2.40 per direct labor hour. During the year, Jobs 1010, 1012, and 1013 were completed. Also, Jobs 1010 and 1013 were sold for $387,000. Assuming that this is Calwell's first year of operations: (a) Make the necessary journal entries to charge the costs to the jobs started and to record the completion and sale of finished jobs. (b) Calculate the ending balances in the Work in Process Inventory, Finished Goods Inventory, and Factory Overhead accounts. Does the Factory Overhead account balance indicate over- or underapplied overhead?

In a job order costing system, any immaterial underapplied overhead at the end of the period can be debited entirely to Cost of Goods Sold.

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of September, but needed an additional $3,000 of direct materials and additional direct labor of $6,500 to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost incurred. What is the total cost of the job when it is completed in October?

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

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

Omega Construction manufactures homes to customer specifications. It most likely uses:

The total costs on job cost sheets for jobs that are not yet completed equals the balance in the Work in Process Inventory account.

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. Minstrel's beginning and ending Work in Process Inventory are $15,500 and $27,000 respectively. Compute the cost of jobs transferred to Finished Goods Inventory.

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

A company that produces products individually designed to meet the needs of a specific customer, would normally use a job order costing system.

The total costs on job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

At the current year-end, Ruiz Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Ruiz should:

Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. The correct journal entry to record the direct labor for the month is: