Chapter 2 Job Order Costing And Analysis Test Bank

Managerial Accounting, 7e (Wild)

Chapter 2 Job Order Costing and Analysis

1) Cost accounting systems accumulate production costs and then assign them to products and services.

2) A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

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

4) There are two basic types of cost accounting systems: job order costing and periodic costing.

5) There are two basic types of cost accounting systems: job order costing and process costing.

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

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

8) Job order costing would be appropriate for companies that produce custom homes and specialized equipment.

9) Job order costing would be appropriate for companies that produce pencils.

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

11) Job order costing would be appropriate for companies that produce training films for a specific customer or custom-made furniture.

12) When a job involves producing more than one unit of a custom product, it is often called a job lot.

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

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

15) 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.

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

17) The direct materials section of a job cost sheet shows the materials costs assigned to a specific job, but the direct labor section only shows the total hours of labor allocated to the job.

18) 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.

19) A job cost sheet does not contain information that is useful for managing the production process.

20) 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.

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

22) The total cost of completed but undelivered jobs equals the balance in the Work in Process Inventory account.

23) Both direct and indirect labor costs are recorded on individual job cost sheets.

24) Job cost sheets include both product and period costs.

25) Only product costs are recorded on job cost sheets.

26) Service firms cannot use job order costing for determining a selling price for their services.

27) Job order costing applies to manufacturing firms only and not to service firms.

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

29) A materials requisition is a source document used by production managers to request materials for production and also used to assign materials costs to specific jobs or to overhead.

30) Requisitions of indirect materials are not recorded on job cost sheets.

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

32) A receiving report is the source document for recording materials received in both a materials ledger card and in the general ledger.

33) In nearly all job order cost systems, materials ledger cards are perpetual records that are updated each time materials are purchased or issued for use in production.

34) The journal entry to record direct materials used includes a debit to Work in Process Inventory.

35) The journal entry to record indirect materials used includes a debit to Work in Process Inventory.

36) The journal entry to record the purchase of materials includes a debit to Work in Process Inventory.

37) Materials requisitions and time tickets are cost accounting source documents.

38) A time ticket is a source document used by an employee to record the number of hours worked on a particular job during the work day.

39) Time tickets can be used to determine the amount of direct labor to charge to jobs.

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

41) A time ticket is a source document used to record the total number of hours worked and serves as a source document for entries to record direct labor costs.

42) When direct labor costs are recorded, the journal entry is a debit to Factory Wages Payable and a credit to Work in Process Inventory.

43) The predetermined overhead rate is used to apply estimated overhead cost to jobs.

44) Factory overhead is often collected and summarized in a subsidiary factory overhead ledger.

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

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

47) Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

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

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

50) The predetermined overhead rate is revised many times during the period to compensate for inaccurate estimates previously made.

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

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

53) Direct materials and direct labor costs are debited to the Factory Overhead account in a job costing system.

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

55) Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

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

57) When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

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

59) 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.

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

61) 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.

62) 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.

63) 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.

64) When overhead is underapplied at the end of a period, the adjusting journal entry includes a credit to Cost of Goods Sold.

65) Underapplied overhead is the amount by which overhead applied to jobs exceeds the actual overhead incurred during a period.

66) Overapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period.

67) Overapplied or underapplied overhead should be removed from the Factory Overhead account at the end of each accounting period.

68) 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.

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

70) If overhead is overapplied, it means that individual jobs have been charged too much overhead during the year and the cost of goods sold reported is too high.

71) If overhead is underapplied, it means that individual jobs have been charged too much during the year and the cost of goods sold reported is too high.

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

73) Period costs for a manufacturing company, such as selling and administrative expenses, are recorded directly to Work in Process Inventory when they are incurred.

74) 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.

75) Cost accounting systems are used to:

A) Accumulate production and period costs and assign them to products or services.

B) Accumulate production costs and assign them to products or services.

C) Accumulate period cost and assign them to products or services.

D) Accumulate production costs and assign them to Raw Materials Inventory.

E) Analyze efficiency and effectiveness of inventory management.

76) A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

A) Finished goods accounting system.

B) General accounting system.

C) Manufacturing accounting system.

D) Cost accounting system.

E) Production accounting system.

77) 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.

78) Compared to a general accounting system, a cost accounting system for a manufacturing company emphasizes:

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.

79) Features of job order production include all of the following except:

A) Diversity of products produced.

B) Mass production.

C) Heterogeneity.

D) Customization.

E) Separate manufacturing from other products.

80) The two basic types of cost accounting systems are:

A) Job order costing and perpetual costing.

B) Job order costing and customized product costing.

C) Job order costing and customized service costing.

D) Job order costing and process costing.

E) Job order costing and periodic costing.

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

A) Operation.

B) Job.

C) Unit.

D) Pool.

E) Process.

82) 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.

83) Job order production is also known as:

A) Mass production.

B) Process production.

C) Unit production.

D) Customized production.

E) Standard costing.

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

A) Process costing.

B) Periodic costing.

C) Unique costing.

D) Job order costing.

E) Activity-based costing.

85) A type of production that yields customized products or services for each customer is called:

A) Customer orientation production.

B) Job order production.

C) Just-in-time production.

D) Job lot production.

E) Process production.

86) A company that makes which of the following types of products would best be suited for a job costing system?

A) Fruit juice

B) Swimming suits

C) Snack chips

D) Phone chargers

E) Custom jewelry

87) 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.

88) A job order production system would be appropriate for a company that produces which one of the following items?

A) A landscaping design for a new hospital.

B) Seedlings for sale in a nursery.

C) Sacks of yard fertilizer.

D) Packets of flower seeds.

E) Small gardening tools, including rakes, shovels, and hoes.

89) Large aircraft manufacturers normally use:

A) Job order costing.

B) Process costing.

C) Mixed costing.

D) Full costing.

E) Simple costing.

90) 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.

91) A job cost sheet shows information about each of the following items except:

A) The direct labor costs assigned to the job.

B) The name of the customer.

C) The costs incurred by the marketing department in selling the job.

D) The overhead costs assigned to the job.

E) The direct materials costs assigned to the job.

92) The job order cost sheets used by Greene Company revealed the following:

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 balance of 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.

93) 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 balance in the Work in Process account at the end of September relative to Job A3B?

A) $5,500

B) $11,500

C) $6,500

D) $9,500

E) $14,500

94) 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?

A) $16,000

B) $22,500

C) $37,000

D) $26,500

E) $32,000

95) 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 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

96) A job cost sheet includes:

A) Direct materials, direct labor, and operating costs.

B) Direct materials, estimated overhead, and administrative costs.

C) Direct labor, actual overhead, and selling costs.

D) Direct material, direct labor, and applied overhead.

E) Direct materials, direct labor, and selling costs.

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

A) the costs for jobs finished during the period but not yet sold.

B) the manufacturing cost of jobs ordered but not yet started into production.

C) the sum of the manufacturing costs for all jobs in process but not yet completed.

D) the manufacturing 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.

98) 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.

99) The Work in Process Inventory account of a manufacturing company has a $4,400 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 $2,000 and direct labor cost of $800. Therefore, the company's predetermined overhead rate is:

A) 40% of direct labor cost.

B) 50% of direct labor cost.

C) 80% of direct labor cost.

D) 200% of direct labor cost.

E) 300% of direct labor cost.

100) 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):

A) Materials ledger card.

B) Materials requisition.

C) Purchase order.

D) Materials voucher.

E) Purchase ledger.

101) A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

A) Job cost sheet.

B) Production order.

C) Materials requisition.

D) Materials purchase order.

E) Receiving report.

102) 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.

103) 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) $97,000.

B) $105,900.

C) $88,100.

D) $95,200.

E) $92,500.

104) A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

106,400. 

A) $106,400.

B) $113,120.

C) $30,240.

D) $211,680.

E) $324,800.

105) A company's overhead rate is 200% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

A) $130,000.

B) $65,000.

C) $270,000.

D) $265,000.

E) $280,000.

106) 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) Payroll Register.

B) Factory payroll record.

C) General Ledger.

D) Time ticket.

E) Factory Overhead Ledger.

107) When direct labor costs are recorded in a job costing:

A) Factory Wages Payable is debited and Work in Process Inventory is credited.

B) Work in Process Inventory is debited and Factory Wages Payable is credited.

C) Cost of Goods Manufactured is debited and Direct Labor is credited.

D) Direct Labor and Indirect Labor are debited and Factory Wages Payable is credited.

E) Work in Process Inventory is debited and Factory Overhead is credited.

108) 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. How are these costs recorded?

A) Debit Payroll Expense $28,900; credit Cash $28,900.

B) Debit Payroll Expense $24,600; debit Factory Overhead $4,300; credit Factory Wages Payable $28,900.

C) Debit Work in Process Inventory $24,600; Debit Factory Overhead $4,300; Credit Factory Wages Payable $28,900.

D) Debit Work in Process Inventory $24,600; credit Factory Wages Payable $28,900.

E) Debit Work in Process Inventory $28,900; credit Factory Wages Payable $28,900.

109) Labor costs in production can be:

A) Direct or indirect.

B) Indirect or sunk.

C) Direct or payroll.

D) Indirect or payroll.

E) Direct or sunk.

110) An example of direct labor cost is:

A) Supervisor salary

B) Maintenance worker wages

C) Janitor wages

D) Product assembler wages

E) Accountant salary

111) A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required direct labor costing $20,000?

A) $5,000.

B) $16,000.

C) $25,000.

D) $125,000.

E) $250,000.

112) The rate established at the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:

A) Predetermined overhead rate.

B) Overhead variance rate.

C) Estimated labor cost rate.

D) Chargeable overhead rate.

E) Miscellaneous overhead rate.

113) 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 predetermined overhead rate was:

A) 5.0%.

B) 12.0%.

C) 20.0%.

D) 500.0%.

E) 16.7%.

114) Lowden Company has a predetermined overhead rate of 160% and allocates overhead based on direct material cost. During the current period, direct labor cost is $50,000 and direct materials cost is $80,000. How much overhead cost should Lowden Company should apply in the current period?

A) $31,250.

B) $50,000.

C) $80,000.

D) $128,000.

E) $208,000.

115) The overhead cost applied to a job during a period is recorded with a credit to Factory Overhead and a debit to:

A) Jobs Overhead Expense.

B) Cost of Goods Sold.

C) Finished Goods Inventory.

D) Indirect Labor.

E) Work in Process Inventory.

116) 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:

A) 75%.

B) 80%.

C) 107%.

D) 125%.

E) 133%.

117) 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 predetermined overhead rate?

A) 6.25%.

B) 62.5%.

C) 160%.

D) 1600%.

E) 67%.

118) 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 facility, $800; factory 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.

119) 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 applied to a job which used $20,000 of direct labor.

A) $8,000.

B) $20,000.

C) $70,000.

D) $50,000.

E) $90,000.

120) Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate?

A) $6.00 per direct labor hour.

B) $7.50 per direct labor hour.

C) $6.67 per direct labor hour.

D) $8.33 per direct labor hour.

E) $7.08 per direct labor hour.

121) Using the following accounts and a predetermined overhead rate of 90% of direct labor cost, determine the amount of applied overhead.

A) $79,200.

B) $167,200.

C) $34,320.

D) $88,000.

E) $35,376.

122) If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale?

A) $8.00.

B) $5.50.

C) $2.50.

D) $1.60.

E) $0.90.

123) 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?

A) $3,750.

B) $2,000.

C) $4,000.

D) $6,000.

E) $9,000.

124) 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:

A) close the $2,500 to Cost of Goods Sold.

B) close the $2,500 to Finished Goods Inventory.

C) do nothing about the $2,500, since it is not material, and it is likely that overhead will be overapplied by the same amount next year.

D) carry the $2,500 to the income statement as "Other Expense".

E) carry the $2,500 to the next period.

125) If overhead applied is less than actual overhead incurred, it is:

A) Fully applied.

B) Underapplied.

C) Overapplied.

D) Expected.

E) Normal.

126) The amount by which the overhead applied to jobs during a period exceeds the overhead incurred during the period is known as:

A) Adjusted overhead.

B) Estimated overhead.

C) Predetermined overhead.

D) Underapplied overhead.

E) Overapplied overhead.

127) The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

A) Balanced overhead.

B) Predetermined overhead.

C) Actual overhead.

D) Underapplied overhead.

E) Overapplied overhead.

128) If a company applies overhead to production with a predetermined overhead rate, a credit balance in the Factory Overhead account at the end of the period means that:

A) The bookkeeper has made an error because the debits don't equal the credits.

B) The balance will be carried forward to the next period as an overhead cost.

C) Actual overhead incurred was less than the overhead amount applied to production.

D) The overhead was underapplied for the period.

E) Actual overhead was greater than the overhead amount applied to production.

129) At year-end, Marshall Enterprise's Factory Overhead account has a credit balance of $5,000, which is not a material amount. What entry should Marshall make at year-end?

A) No entry is needed.

B) Debit Factory Overhead $5,000; credit Cost of Goods Sold $5,000.

C) Debit Cost of Goods Sold $5,000; credit Factory Overhead $5,000.

D) Debit Factory Overhead $5,000; credit Work in Process Inventory $5,000.

E) Debit Factory Overhead $5,000; credit Finished Goods Inventory $5,000.

130) 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:

A) $380,000 Debit balance.

B) $360,000 Debit balance.

C) $20,000 Debit balance.

D) $400,000 Credit balance.

E) $20,000 Credit balance.

131) 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, Factory Overhead is:

A) Overapplied by $20,000.

B) Overapplied by $190,000.

C) Underapplied by $20,000.

D) Overapplied by $40,000.

E) Neither overapplied nor underapplied.

132) 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.

133) 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, Factory Overhead account is:

A) Overapplied by $10,000.

B) Overapplied by $170,000.

C) Underapplied by $10,000.

D) Overapplied by $20,000.

E) Neither overapplied nor underapplied.

134) Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include

A) a debit to Cost of Goods Sold for $600.

B) a credit to Factory Overhead for $600.

C) a credit to Finished Goods Inventory for $600.

D) a debit to Work in Process Inventory for $600.

E) a credit to Cost of Goods Sold for $600.

135) If overhead is underapplied all of the following are true except: 

A) The Factory Overhead account has a debit balance.

B) Jobs are undercosted.

C) Jobs are overcosted.

D) The adjusting journal entry requires a debit to Cost of Goods Sold.

E) The adjusting journal entry requires a credit to Factory Overhead.

136) Marina Corp. applied overhead to jobs during the period as follows:

The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account. The entry to dispose of this remaining factory overhead balance is:

A) Debit Cost of Goods Sold $5,600; credit Factory Overhead $5,600.

B) Debit Factory Overhead $5,600; credit Cost of Goods Sold $5,600.

C) Debit Factory Overhead $5,600; credit Work in Process Inventory $5,600.

D) Debit Work in Process Inventory $5,600; credit Factory Overhead $5,600.

E) No entry is needed.

137) 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?

A) $46,000

B) $11,000

C) $33,000

D) $24,000

E) $9,000

138) 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 direct materials and $13,000 indirect materials. How should Andrews record the purchase of raw materials for March?

A) Debit Raw Materials Inventory $165,000; credit Accounts Payable $165,000

B) Debit Work in Process Inventory $165,000; credit Raw Materials Inventory $165,000

C) Debit Raw Materials Inventory $187,000; credit Cash $187,000

D) Debit Accounts Payable $165,000; credit Raw Materials Inventory $165,000

E) Debit Accounts Payable $187,000; credit Raw Materials Inventory $187,000

139) 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 amount will Andrew debit to Work in Process Inventory for the month of March?

A) $165,000

B) $154,000

C) $13,000

D) $141,000

E) $33,000

140) 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 journal entry should Andrew use to account for direct materials used in March:

A) Debit Raw Materials Inventory $141,000; credit Accounts Payable $141,000.

B) Debit Work in Process Inventory $141,000; credit Raw Materials Inventory $141,000.

C) Debit Work in Process Inventory $141,000; credit Accounts Payable $141,000.

D) Debit Finished Goods Inventory $22,000; credit Raw Materials Inventory $22,000.

E) Debit Raw Materials Inventory $153,000; credit Work in Process Inventory $153,000.

141) 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:

A) Debit Payroll Expense $212,000; credit Cash $212,000.

B) Debit Factory Wages Payable $285,000; credit Work in Process Inventory $212,000.

C) Debit Work in Process Inventory $212,000; credit Cash $285,000.

D) Debit Work in Process Inventory $285,000; credit Factory Wages Payable $285,000.

E) Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000.

142) 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.

143) 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 purchase of materials is:

A) Debit Raw Materials Inventory $198,000; credit Accounts Payable $198,000.

B) Debit Work in Process Inventory $198,000; credit Accounts Payable $198,000.

C) Debit Raw Materials Inventory $198,000; credit Work in Process Inventory $198,000.

D) Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000.

E) Debit Raw Materials Inventory $198,000; credit Finished Goods Inventory $198,000.

144) 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 issuance of materials to production is:

A) Debit Raw Materials Inventory $195,000; credit Accounts Payable $195,000.

B) Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000.

C) Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.

D) Debit Work in Process Inventory $165,000; debit Factory Overhead $30,000; credit Raw Materials Inventory $195,000.

E) Debit Finished Goods Inventory $195,000; credit Raw Materials Inventory $195,000.

145) 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:

A) Debit Work in Process Inventory $150,000; debit Factory Overhead $40,000; credit Factory Wages Payable $190,000.

B) Debit Work in Process Inventory $150,000; credit Cash $150,000.

C) Debit Work in Process Inventory $110,000; debit Factory Overhead $40,000; credit Factory Wages Payable $150,000.

D) Debit Work in Process Inventory $150,000; credit Factory Overhead $40,000; credit Factory Wages Payable $110,000.

E) Debit Work in Process Inventory $110,000; credit Factory Overhead $40,000; credit Factory Wages Payable $150,000.

146) 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 payment of the factory payroll is:

A) Debit Work in Process Inventory $150,000; credit Factory Wages Payable $150,000.

B) Debit Work in Process Inventory $150,000; credit Cash $150,000.

C) Debit Factory Wages Payable $150,000; credit Cash $150,000.

D) Debit Factory Overhead $40,000; credit Factory Wages Payable $40,000.

E) Debit Work in Process Inventory $110,000; credit Cash $150,000.

147) 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:

A) Debit Work in Process Inventory $225,000; credit Factory Overhead $225,000.

B) Debit Work in Process Inventory $165,000; credit Factory Overhead $165,000.

C) Debit Factory Payroll $150,000; credit Work in Process Inventory $150,000.

D) Debit Factory Overhead $165,000; credit Work in Process Inventory $165,000.

E) Debit Work in Process Inventory $165,000; credit Factory Payroll $165,000.

148) 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 total manufacturing costs added during the period is:

A) $440,000.

B) $470,000.

C) $500,000.

D) $570,000.

E) $540,000.

149) 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) $2,800 overapplied.

B) $17,800 underapplied.

C) $2,800 underapplied.

D) $17,800 overapplied.

E) $57,200 overapplied.

150) 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.

A) $558,500.

B) $440,000.

C) $413,000.

D) $428,500.

E) $415,000.

151) 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?

A) $31,600.

B) $58,000.

C) $56,000.

D) $60,000.

E) $86,400.

152) 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  predetermined overhead rate.

A) 180%.

B) 55.6%.

C) 186%.

D) 184%.

E) 96.6%.

153) 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 overhead applied to jobs during the year.

A) $396,000.

B) $424,450.

C) $413,190.

D) $413,200.

E) $403,200.

154) 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.

155) Using the following accounts and a predetermined overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

A) $78,000.

B) $60,000.

C) $138,000.

D) $71,890.

E) $90,500.

156) 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 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 issuance of materials to production is:

A) Debit Raw Materials Inventory $153,000; credit Accounts Payable $153,000.

B) Debit Work in Process Inventory $140,000; debit Factory Overhead $24,000; credit Raw Materials Inventory $164,000.

C) Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.

D) Debit Work in Process Inventory $140,000; debit Raw Materials Inventory $24,000; credit Materials Inventory $164,000.

E) Debit Finished Goods Inventory $140,000; credit Raw Materials Inventory $140,000.

157) 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 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 allocation of factory wages to production is:

A) Debit Work in Process Inventory $95,000; credit Factory Wages Payable $95,000.

B) Debit Work in Process Inventory $95,000; credit Cash $95,000.

C) Debit Factory Wages Payable $95,000; credit Cash $95,000.

D) Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Factory Wages Payable $95,000.

E) Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Cash $95,000.

158) 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:

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.

159) 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. Direct materials are assigned to each job according to actual cost. If Job M-47 used $350 of direct materials and took 20 direct labor hours of labor to complete, what is the total cost that should be assigned to the job?

A) $590

B) $600

C) $380

D) $950

E) $710

160) 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. Direct materials are assigned to each job according to actual cost. Jobs are marked up 20% above total manufacturing cost to determine the selling price. If Job M-47 used $350 of direct materials and took 20 direct hours of labor to complete, what is the selling price of the job?

A) $852

B) $1,140

C) $456

D) $720

E) $708

161) 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 production

J. Predetermined overhead rate

K. Materials ledger card

________ 1. The production of products in response to special orders; also called customized production.

________ 2. Accumulates production costs and assigns them to products and services.

________ 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 activity base such as estimated direct labor and is used to assign overhead cost to a job.

________ 6. An asset account where costs of completed jobs are kept 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 cost 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.

162) What is a cost accounting system? What are the two basic types of cost accounting systems?

163) Describe the purpose of a job cost sheet, and explain what information is found on the job cost sheet.

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

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

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

167) Describe the flow of labor costs in a job order costing system, and identify the documents used in the system.

168) Describe the flow of the employee labor, both direct and indirect, through the inventory accounts.

169) Explain what a predetermined overhead rate is, how it is calculated, and why it is used.

170) Explain why the Factory Overhead account for a company may have a difference between the amount debited and the amount credited, resulting in an end of period balance prior to adjustment.

171) How do manufacturing firms adjust the overapplied or underapplied factory overhead account at the end of an accounting period?

172) 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:

(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?

173) 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?

174) 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):

Part 1—Complete job cost sheets for each job.

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________

175) The following data relates to the Mass Company's first operating period. Calculate the total cost of goods sold for each product.

176) 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.

177) A company that uses a job order costing system incurred $10,000 of factory payroll during May. Prepare the May 31 entry assuming $8,000 is direct labor and $2,000 is indirect labor.

178) Time tickets for factory employees during the month of August are summarized as follows:

Prepare the necessary journal entries to record factory payroll for direct and indirect labor.

179) Chumley Advertising Agency contracted with a company to prepare an ad campaign. Chumley uses a job order costing system. Chumley estimates that the job will take 140 designer hours at $90 per hour and 85 staff hours at $45 per hour. Chumley uses two overhead rates in applying overhead to jobs: Designer-related at $100 per designer hour and staff-related at $50 per staff hour. Determine the total estimated cost for this job.

180) KL Company uses a job order costing system. During the month of July, the following events occurred:

(a) Purchased raw materials on credit, $32,000.

(b) Raw materials requisitioned: $25,800 as direct materials and $10,500 indirect materials.

(c) Recorded the factory payroll totaling $37,700, which includes $8,200 indirect labor, to jobs and overhead.

Make the necessary journal entries to record the above transactions and events.

181) EXP, Inc. had the following activities during its most recent period of operations:

(a) Purchased raw materials on account for $140,000 (both direct and indirect materials are recorded in the Raw Materials Inventory account).

(b) Issued raw materials to production of $130,000 (80% direct and 20% indirect).

(c) Incurred factory labor costs of $250,000; allocated the factory labor costs to production (70% direct and 30% indirect).

(d) Incurred factory utilities costs of $20,000; this amount is still payable.

(e) Applied overhead at 80% of direct labor costs.

(f) Recorded factory depreciation, $22,000.

Prepare journal entries to record the above transactions.

182) Lock Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000.

(1) If the $28,000 cost of Lock's Work in Process Inventory included $5,200 of direct labor cost, what amount of direct materials cost was included?

(2) If instead $8,100 of the company's $34,300 Finished Goods Inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

183) Prepare journal entries to record the following transactions and events for April using a job order costing system.

(a) Purchased raw materials on credit, $69,000.

(b) Raw materials requisitioned: $26,000 direct and $5,400 indirect.

(c) Factory payroll totaled $46,000, including $9,500 indirect labor.

(d) Paid other actual overhead costs totaling $14,500 cash.

(e) Applied overhead totaling $28,200.

(f) Finished and transferred jobs totaling $77,500.

(g) Jobs costing $58,800 were sold on credit for $103,000.

184) 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?

185) Production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of direct labor costs. What is the gross profit on the sale of one unit of Product BJM?

186) A company uses a job order costing system and applies overhead on the basis of direct labor cost. A summary of the company's Work in Process Inventory account for December appears below.

Work In Process

Fill in the blanks for the following:

(1) The total cost of the direct materials, direct labor, and factory overhead for jobs still in progress is $________.

(2) The company's overhead application rate is ________%

(3) Job No. 6 had $26,550 of direct labor cost. Therefore, the job must have had $________ of direct materials cost.

(4) Job No. 8 had $73,998 of direct materials cost. Therefore, the job must have had $________ of factory overhead cost.

187) Heintz Company's job order costing system applies overhead based on direct labor costs. The company's manufacturing costs for the current year were: direct materials, $108,000; direct labor, $144,000; and factory overhead, $36,000. At year-end, the total cost of Work in Process is $38,000, which includes $12,000 of direct labor cost. What amount of direct material cost is included in the ending Work in Process inventory?

188) MOB Corp. applies overhead on the basis of direct labor costs. Its bookkeeper accidentally deleted most of the journal 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.

189) Chen Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200.

Prepare the adjusting journal entry for over- or underapplied overhead .

190) 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?

191) The following information is available for Annum Corporation for the current year:

Annum Company uses a predetermined overhead rate of 150% of direct labor cost. Prepare journal entries for the following transactions and events.

(a) Purchase of raw materials on account.

(b) Assignment of materials costs to Work in Process Inventory and Factory Overhead.

(c) Assignment of factory payroll to Work in Process Inventory and Factory Overhead.

(d) Recording of other factory overhead. Assume that all items other than depreciation are paid in cash.

(e) Apply factory overhead to Work in Process Inventory.

(f) Transfer of goods completed to Finished Goods Inventory.

(g) Recording cost of goods sold.

(h) Assignment of over- or underapplied overhead to Cost of Goods Sold.

192) A company's predetermined overhead rate is 130% of direct labor cost. How much overhead would be allocated to a job that required total direct labor costs of $60,000?

193) A company's predetermined overhead rate is applied at 150% of direct materials cost. How much overhead would be allocated to a job that used total direct materials costs was $40,000?

194) Selected information for Singh Corp. for the year follows:

Calculate the predetermined overhead rate using:

(a) Estimated direct labor hours.

(b) Estimated direct labor cost.

(c) Estimated machine hours.

195) 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?

196) Nutley Company uses a job order cost system and last period incurred $70,000 of overhead and $100,000 of direct labor. Nutley estimates that its overhead next period will be $65,000. The company also expects to incur $100,000 of direct labor. If Nutley bases its overhead applied on direct labor cost, what should be the predetermined overhead rate for the next period?

197) A company's job order costing system applies overhead based on direct labor cost. The company's estimated production costs were: direct labor, $57,600; direct materials, $76,800; and factory overhead, $9,600. Calculate the company's predetermined overhead rate.

198) The job cost sheet for Job number 83-421 includes the following information:

DIRECT MATERIALS:

7/12 Requisition R88-566: 20 units @ $ 3.50 per unit

7/13 Requisition R88-576: 18 units @ $ 5.00 per unit

7/13 Requisition R88-578: 4 units @ $25.00 per unit

7/14 Requisition R88-591: 40 units @ $ 1.25 per unit

DIRECT LABOR:

7/12 Employee 19: 8 hours @ $ 9.00 per hour

7/13 Employee 19: 6 hours @ $ 9.00 per hour

7/13 Employee 37: 6 hours @ $ 8.00 per hour

7/14 Employee 19: 5 hours @ $ 9.00 per hour

7/14 Employee 92: 5 hours @ $11.00 per hour

FACTORY OVERHEAD: Assigned at 150% of direct labor cost.

What is the total cost of Job number 83-421?

199) The following information about the Zhang Company is available on December 31:

The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.

200) The predetermined overhead rate for Foster, Inc., is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000. Actual costs incurred were:

(a) Calculate the predetermined overhead rate and calculate the overhead applied during the year.

(b) Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.

201) A company charged the following amounts of overhead to jobs during the current year: $12,000 to jobs still in process, $42,000 to jobs completed but not sold, and $66,000 to jobs finished and sold. At year-end, the company's Factory Overhead account has a credit balance of $9,000. What entry (if any) should the company make at year-end related to this overhead balance?

202) Oddley Corp. uses a job order costing system. The following information pertains to costs applied to jobs during the current year:

Jobs still in process at the end of the year:

$167,000, which includes $65,000 direct labor costs.

Jobs finished and sold during the year:

$395,000, which includes $172,000 direct labor costs.

Jobs finished but unsold during the year:

$103,000, which includes $38,000 direct labor costs.

Oddley Corp.'s predetermined overhead rate is 60% of direct labor cost. At the end of the year, the company's records show that $189,000 of actual factory overhead has been incurred.

(a) Determine the amount of overapplied or underapplied overhead.

(b) Prepare the necessary journal entry to close the Factory Overhead account assuming that any remaining balance is not material.

203) Taylor Corp. uses a job order costing system and worked only on Job 101 during the current period. Job 101 was sold for $460,000. The following information pertains to costs incurred for Job 101.

After adjusting for the amount of over- or underapplied overhead, determine the amount of gross profit earned during the year.

204) At the end of June, job cost sheets for Kennedy Manufacturing show the following total costs accumulated on three custom jobs:

Job 203 was started in production in May and the following costs were assigned to it in May: direct materials, $12,000; direct labor, $6,000; and overhead $8,700. Jobs 204 and 205 are started in June. Overhead cost is applied with a predetermined rate based on direct labor cost. Jobs 203 and 204 are finished in June, and Job 205 will be finished in July. No raw materials are used indirectly in June. Using this information, answer the following questions assuming the company's predetermined overhead rate did not change.

a. What is the total cost of direct materials requisitioned in June for the three jobs?

b. What is the total direct labor cost incurred during June for the three jobs?

c. What predetermined overhead rate is used during June?

d. How much total cost is transferred to finished goods during June?

205) 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.

a. Determine the predetermined overhead rate used.

b. Only one job remained in process at December 31. Its direct materials cost is $60,000. How much direct labor cost and overhead cost are assigned to it?

206) Franklin Manufacturing uses a job order costing system that charges overhead to jobs on the basis of direct labor cost. Franklin used the following cost predictions: overhead costs $1,285,750, and direct labor costs of $695,000. At year-end, the company's records show that actual overhead costs for the year are $1,278,800, and actual direct labor costs are $692,000.

a. Determine the predetermined overhead rate for the year.

b. Compute the amount of overapplied or underapplied overhead.

c. Prepare the adjusting entry for over- or underapplied overhead, assuming the amount is immaterial.

207) 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.

208) 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:

a. Calculate the predetermined overhead rate and calculate the overhead applied during the year.

b. Prepare the journal entry to eliminate the over- or underapplied overhead, assuming that it is not material in amount.

209) A ________ accounting system accumulates production costs and assigns them to products or services.

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

211) A ________ is a separate record maintained for each job.

212) The total cost on job cost sheets for all jobs in process equals the amount in the ________ Inventory account.

213) In a job order costing system, raw materials requisitioned as direct materials are debited to ________; indirect materials are debited to ________.

214) When direct labor is assigned to specific jobs, ________ is debited.

215) When indirect labor is recorded, ________ is debited.

216) A ________ is calculated by dividing total estimated factory overhead by an activity base such as total estimated direct labor cost.

217) When the actual overhead incurred during an accounting period is more than the overhead applied to jobs, the overhead is said to be ________.

218) Overapplied overhead should be ________ to the Cost of Goods Sold account when closed.