Q&A Hero

Q: Mesa Corp. allocates overhead to production on the basis of direct labor costs. Mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory. A.$ 8,000. B.$20,000. C.$70,000. D.$50,000. E.$90,000.

Q: The B&T Company's production costs for May are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. B&T Company's factory overhead incurred for May is: A.$ 2,000. B.$ 6,500. C.$ 8,500. D.$21,500. E.$36,500.

Q: Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Cosi expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is Cosi Company's overhead application rate? A.6.25%. B.62.5%. C.160%. D.1600%. E.67%.

Q: 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. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be: A.75%. B.80%. C.107%. D.125%. E.133%.

Q: Lowden Company has an overhead application rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $50,000 and direct materials used cost $80,000. Determine the amount of overhead Lowden Company should record in the current period. A.$ 31,250 B.$ 50,000 C.$ 80,000. D.$ 128,000. E.$ 208,000.

Q: Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead application rate was: A.5.0%. B.12.0%. C.20.0%. D.500.0%. E.16.7%.

Q: An example of direct labor cost is: A. Supervisor salary B. Maintenance worker wages C. Janitor wages D. Product assembler wages E. Accountant salary

Q: Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor. These costs were accumulated in Factory Payroll as they were paid. Which entry should Oxford make to assign the Factory Payroll? A.Debit Payroll Expense $28,900; credit Cash $28,900. B.Debit Payroll Expense $24,600; debit Factory Overhead $4,300; credit Factory Payroll $28,900. C.Debit Work in Process Inventory $24,600; debit Factory Overhead $4,300; credit Factory Payroll $28,900. D.Debit Work in Process Inventory $24,600; debit Factory Overhead $4,300; credit Wages Payable $28,900. E.Debit Work in Process Inventory $28,900; credit Factory Payroll $28,900.

Q: The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory. Work in Process Inventory DR CR Beginning balance 4,500 Direct materials 47,100 Direct labor 29,600 ? Finished goods Applied overhead 15,800 Ending balance 8,900 The cost of units transferred to finished goods is: A.$ 97,000. B.$105,900. C.$ 88,100. D.$ 95,200. E.$ 92,500

Q: A company that uses a job order costing system would make the following entry to record the flow of direct materials into production: A.debit Work in Process Inventory, credit Cost of Goods Sold. B.debit Work in Process Inventory, credit Raw Materials Inventory. C.debit Work in Process Inventory, credit Factory Overhead. D.debit Factory Overhead, credit Raw Materials Inventory. E.debit Finished Goods Inventory, credit Raw Materials Inventory.

Q: The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is: A.40%. B.50%. C.80%. D.200%. E.220%.

Q: The balance in the Work In Process Inventory at any point in time is equal to: A. The costs for jobs finished during the period but not yet sold. B. The cost of jobs ordered but not yet started into production. C. The sum of the costs for all jobs in process but not yet completed. D. The costs of all jobs started during the period, completed or not. E. The sum of the materials, labor and overhead costs paid during the period.

Q: A job cost sheet includes: A.Direct materials, direct labor, operating costs. B.Direct materials, estimated overhead, administrative costs. C.Direct labor, actual overhead, selling costs. D.Direct material, direct labor, estimated overhead. E.Direct materials, direct labor, selling costs.

Q: 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 the month, but needed an additional $3,000 of direct materials in October and additional direct labor of $6,500 to finish the job. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October? A. $16,000 B. $22,500 C. $37,000 D. $26,500 E. $32,000

Q: The job order cost sheets used by Greene Company revealed the following: Job. No. Bal., May 1 May Production Costs 134 $1,700 $ 0 135 1,200 300 136 0 900 Job No. 135 was completed during May and Jobs No. 134 and 135 were shipped to customers in May. What was the company's cost of goods sold for May and the Work in Process inventory on May 31? A.$3,200; $ 900. B.$2,900; $1,200. C.$1,200; $2,900. D.$1,700; $1,200. E.$4,100; $ 0.

Q: A document in a job order costing system that is used to record the costs of producing a job is a(n): A.Job cost sheet. B.Job lot. C.Finished goods summary. D.Process cost system. E.Units-of-production sheet.

Q: Large aircraft producers such as the Boeing Company normally use: A.Job order costing. B.Process costing. C.Mixed costing. D.Full costing. E.Simple costing.

Q: The target cost for a job using job costing is calculated as A.direct costs + desired profit B.direct costs " desired profit C.expected selling price " direct costs D.expected selling price " desired profit E.expected selling price + desired profit

Q: A company that makes which of the following types of products would best be suited for a job costing system? A. Fruit juice B. Bathing suits C. Snack chips D. Compact discs E. Custom jewelry

Q: Omega Contractors manufactures each house to customer specifications. It most likely would use: A.Process costing. B.A periodic inventory system. C.Unique costing. D.Job order costing. E.Activity-based costing.

Q: A job order costing system would best fit the needs of a company that makes: A.Shoes and apparel. B.Paint. C.Cement. D.Custom machinery. E.Pencils and erasers.

Q: Features of a job costing system include all but which of the following: A. Diversity of products produced. B. Mass production. C. Heterogeneity D. Customization E. Separate manufacturing from other products

Q: In comparison to a general accounting system, a cost accounting system for a manufacturing company places an emphasis on: A.Periodic inventory counts. B.Total costs. C.Continually updating costs of materials, work in process, and finished goods inventories. D.Products and average costs. E.Large volume operations involving standardized products.

Q: Manufacturing costs incurred for jobs completed during an accounting period can bypass the inventory accounts on the balance sheet and be recorded directly in expense accounts.

Q: The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.

Q: If overhead is underapplied, it means that individual jobs have not been charged enough during the year and the cost of goods sold reported is too low.

Q: Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period.

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

Q: Direct materials and direct labor are examples of costs that are debited to the Factory Overhead account in a job costing system.

Q: Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

Q: Under a job order costing system, individual jobs are always charged with actual overhead costs when they are transferred to finished goods.

Q: Since a predetermined overhead rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

Q: In a job order costing system, indirect labor costs are debited to the Factory Overhead account.

Q: The predetermined overhead rate based on direct labor cost is the ratio of estimated overhead cost to estimated direct labor cost for the period.

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

Q: The predetermined overhead rate is used to allocate overhead cost to jobs.

Q: A time ticket is a source document that an employee uses to report how much direct and indirect labor was performed for a job and is used to determine the amount of direct labor to charge to the job and the amount of indirect labor to charge to factory overhead.

Q: The cost of all direct materials issued to production is debited to Work in Process Inventory.

Q: Both direct and indirect labor costs are recorded on the individual job cost sheets.

Q: A company's file of job cost sheets jobs not yet completed equals the balance in the Finished Goods Inventory account.

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

Q: Cost accounting information is helpful to management for pricing decisions but has no effect on controlling costs.

Q: Cost accounting systems accumulate costs and then assigns them to products or services.

Q: Southwick Company uses a job order costing system. On November 1, $15,000 of direct materials and $3,500 of indirect materials were requisitioned for production. Prepare the general journal entries to record this requisition.

Q: The following data relates to the Mass Company's first operating period. Calculate the total cost of goods sold for each product. Overhead rate Cost/unit Units (Percent Direct Direct Ending of Direct Product Materials Labor Produced Inventory Labor cost) A $10 $12 215 115 60% B 8 15 330 180 40% C 14 10 250 200 80%

Q: Chung Corporation uses a job order costing system. Five jobs were worked on during the current year. The predetermined overhead rate is 20% of direct labor costs. The following cost information is available (all materials and time ticket information applies to direct costs): Job Materials Requisitions Time Tickets 101 $66,000 $32,000 102 $63,000 $74,000 103 $39,000 $50,000 104 $32,000 $36,000 105 $53,000 $68,000 Part 1"Complete the job cost sheets for each job. Job No. 101 Job No. 102 Job No. 103 Materials Materials Materials Labor Labor Labor Overhead Overhead Overhead Total Cost Total Cost Total Cost Status In Process Status Sold Status Finished Job No. 104 Job No. 105 Materials Materials Labor Labor Overhead Overhead Total Cost Total Cost Status Sold Status Finished Part 2"Identify the amounts of each of the following accounts at the end of the period a. Work in Process____________________ b. Finished Goods____________________ c. Cost of Goods Sold____________________

Q: The 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: Number Total Cost Incurred Status of Job 951 $ 4,200 Finished and delivered 952 $ 7,700 Unfinished 953 $ 9,300 Finished and unsold 954 $11,100 Finished and delivered 955 $ 3,000 Finished and unsold 956 $ 5,500 Finished and delivered 957 $35,000 Unfinished 958 $ 3,200 Finished and delivered 959 $ 500 Unfinished 960 $22,110 Unfinished 961 $ 7,200 Finished and delivered 962 $ 8,500 Unfinished 963 $11,200 Finished and unsold (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?

Q: The Merker Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during April of the current year. This table summarizes information provided on each sheet: Number Total Cost Incurred Status of Job 544 $15,050 Finished and delivered 545 $22,400 Finished and delivered 546 $ 7,500 Finished and unsold 547 $ 4,300 Finished and delivered 548 $33,000 Unfinished 549 $62,000 Finished and unsold 550 $14,600 Unfinished 551 $22,200 Finished and delivered 552 $ 3,600 Finished and unsold 553 $ 1,000 Unfinished (a) What is the cost of goods sold for the month of April? (b) What is the cost of the Work in Process inventory on April 30? (c) What is the cost of the finished goods inventory on April 30?

Q: Explain why the Factory Overhead account for a company may have a difference between the amount debited and credited at the end an accounting period before adjustment.

Q: Explain what a predetermined overhead rate is, how it is calculated, and why it is used.

Q: Describe the flow of the employee labor, both direct and indirect, through the inventory accounts.

Q: Describe the flow of the raw materials, both direct and indirect, through the inventory accounts from purchase to use.

Q: Describe how materials flow through a job order costing system, and identify the key documents in the system.

Q: I; 2. A; 3. G; 4. F; 5. J; 6. C; 7. D; 8. K; 9. B; 10. E; 11. H Short Answer Questions

Q: Match the following terms to the appropriate definition. A. Cost accounting system B. Time ticket C. Finished Goods Inventory D. Materials requisition E. Underapplied overhead F. Work In Process Inventory G. Overapplied overhead H. Job cost sheet I. Job order costing system J. Predetermined overhead rate K. Materials ledger card _______ 1. The production of products in response to special orders; also called customized production. _______ 2. Records manufacturing activities using a perpetual inventory system. _______ 3. The amount by which the overhead applied to jobs in a period with the predetermined overhead rate exceeds the actual overhead incurred in a period. _______ 4. An asset account where costs are accumulated while jobs are being produced. _______ 5. The rate established prior to the beginning of a period that relates estimated overhead to an allocation factor such as estimated direct labor and is used to assign overhead cost to a job. _______ 6. An asset account where costs of completed jobs reside until the jobs are delivered to customers. _______ 7. A source document that production managers use to request materials needed for manufacturing and that is used to assign materials costs to specific jobs or to overhead. _______ 8. A perpetual record that is updated each time units of raw material are purchased and issued for use in production. _______ 9. A source document that is used to report how much time an employee spent working on a job or on overhead activities and the labor costs to assign to jobs or overhead. _______10. The amount by which actual overhead incurred in a period exceeds the overhead applied to jobs with the predetermined overhead rate. _______11. A separate record maintained for each job in a job order costing system; it shows the costs of direct materials, direct labor, and overhead for each job.

Q: 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. Jobs are marked up 20% above cost to determine the selling price. If Job M-47 used $350 of materials and took 20 hours of labor to complete, what is the selling price that should be assigned to the job? A. $852 B. $1,140 C. $456 D. $720 E. $708

Q: 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 of $95,000, paid in cash, 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: A.Debit Work in Process Inventory $55,800; credit Factory Overhead $55,800. B.Debit Work in Process Inventory $161,500; credit Factory Overhead $161,500. C.Debit Work in Process Inventory $119,000; credit Factory Overhead $119,000. D.Debit Factory Overhead $119,000; credit Work in Process Inventory $119,000. E.Debit Work in Process Inventory $95,000; credit Factory Payroll $95,000.

Q: Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year. A.$10,000 overapplied. B.$17,200 overapplied. C.$10,000 underapplied. D.$17,200 underapplied. E.$4,800 underapplied.

Q: 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, paid in cash, 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 product transferred to Finished Goods Inventory: A.$558,500. B.$440,000. C.$413,000. D.$428,500. E.$415,000.

Q: 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 $73,000 indirect labor for the month is: A. Debit Supervisor Wage Expense; credit Factory Wages Payable. B. Debit Factory Overhead; credit Factory Wages Payable. C. Debit Supervisor Wage Expense; credit Factory Overhead. D. Debit Factory Wages Payable; credit Factory Overhead. E. Debit Factory Wage Expense; credit Cash.

Q: Costs that are capitalized as inventory when they are incurred are called: A.Period costs. B.Product costs. C.General costs. D.Administrative costs. E.Fixed costs.

Q: For product costs associated with a particular product to be reported on the income statement: A.The product must be transferred to Finished Goods Inventory. B.The product must still be in Work in Process Inventory. C.The product must be sold. D.The product may be in any of the manufacturer's inventory accounts. E.The company must expect to sell the product during the next twelve months.

Q: Period costs for a manufacturing company would flow directly to: A.The income statement as an expense. B.Factory overhead. C.The balance sheet as inventory. D.Cost of goods sold on the income statement. E.The current schedule of cost of goods manufactured.

Q: Last year, Flash Company sold 15,000 units of its only product. If sales decreased by 17% in the current year, how will total variable cost and total fixed cost be affected? Total Variable Cost Total Fixed Cost A) Remains constant Remains constant B) Increases Decreases C) Decreases Remains constant D) Remains constant Decreases E) Remains constant Increases A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E

Q: Last year, Gordon Company sold 20,000 units of its only product. If sales increase by 20% in the current year, how will unit variable cost and total fixed cost be affected? Unit Variable Cost Total Fixed Cost A) Remains constant Remains constant B) Increases Decreases C) Decreases Remains constant D) Remains constant Decreases E) Remains constant Increases A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E

Q: Last year, Wesson Company sold 10,000 units of its only product. If sales increase by 12% in the current year, how will unit variable cost and unit fixed cost be affected? Unit Variable Cost Unit Fixed Cost A) Remains constant Remains constant B) Increases Decreases C) Decreases Remains constant D) Remains constant Decreases E) Remains constant Increases A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E

Q: A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is: A.Fixed versus variable. B.Direct versus indirect. C.Financial versus managerial. D.Service versus manufacturing. E.Product versus period.

Q: Classifying costs by behavior with changes in volume of activity involves: A.Identifying fixed cost and variable cost. B.Identifying cost of goods sold and operating costs. C.Identifying costs as financial or managerial. D.Identifying costs in a physical manner. E.Identifying both quantitative and qualitative cost factors.

Q: A direct cost is a cost that is: A.Identifiable as controllable. B.Traceable to the company as a whole. C.Does not change with the volume of activity. D.Traceable to a single cost object. E.Traceable to multiple cost objects.

Q: An employee is dissatisfied with the resolution of an ethical conflict with his supervisor at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to A.contact the IMA. B.contact the next level of management who is not involved in the ethical conflict. C.make the president of the company aware of the ethical conflict. D.report the incident to the State Board of Accountancy. E.resign from the company.

Q: Jenny, an employee of Toucan Company, used company assets for her own personal gain. This is an example of A.embezzlement. B.fraud. C.internal control. D.ethics. E.employment perks.

Q: A management concept that seeks to uncover and eliminate waste in all aspects of business activities is called: A.Continuous operations. B.Customer orientation. C.Just-in-time. D.Theory of constraints. E.Total quality management.

Q: A management concept based on an understanding of the changing wants and needs of customers, and which leads to flexible product designs and production processes, is called: A.Continuous improvement. B.Customer orientation. C.Just-in-time. D.Theory of constraints. E.Total quality management.

Q: Continuous improvement: A.Encourages employees to maintain established business practices. B.Strives to preserve acceptable levels of performance. C.Rejects the notion of "good enough." D.Is not applicable to most businesses. E.Is possible only in service businesses.

Q: The Malcolm Baldrige National Quality Award that encourages an emphasis on quality was established by A.The United Nations. B.The U.S. Chamber of Commerce. C.The Malcolm Baldrige Foundation. D.The U.S. Congress. E.The SEC.

Q: Which of the following items is not a management concept that was created to improve companies' performances? A.Just-in-time manufacturing. B. GAAP constraints and guidelines. C.Total quality management. D.Continuous improvement. E. Customer orientation

Q: Which of the following items does not represent a difference between financial and managerial accounting? A.Users of the information. B.Flexibility of reporting. C.Timeliness of information. D.Focus of the information. E.Managerial accounting does not use the financial information from the financial accounting system.

Q: The schedule of cost of goods manufactured must be prepared monthly as it is a required general-purpose financial statement.

Q: The schedule of cost of goods manufactured is also known as a manufacturing statement.

Q: The raw materials inventory turnover is raw materials purchased divided by the average raw materials inventory.