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Exam 19: Job Order Costing

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Question 71

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The Quadrangle Fabrication Plant suffered a fire incident at the beginning of the year,which resulted in the loss of property including the accounting records.Some data for the year were retrieved,and extracts from it are shown below: $\begin{array} { | l | r | } \hline \begin{array} { l } \text { Total manufacturing overhead costs estimated at the beginning } \\\text { of the year }\end{array} & \$ 105,420 \\\hline \text { Total direct labor costs estimated at the beginning of the year } & \$ 185,000 \\\hline \text { Total direct labor hours estimated at the beginning of the year } & 3,200 \text { direct labor hours } \\\hline \text { Actual manufacturing overhead costs for the year } & \$ 99,440 \\\hline \text { Actual direct labor costs for the year } & \$ 150,000 \\\hline \text { Actual direct labor hours for the year } & 2,450 \text { direct labor hours } \\\hline\end{array}$ The company's manufacturing overhead allocation is based on direct labor hours.How much manufacturing overhead was allocated to production during the year? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

A) $105,420
B) $80,703
C) $137,691
D) $185,000

E) A) and B)
F) A) and C)

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Question 72

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The predetermined overhead allocation rate for a given production year is calculated ________.

A) at the end of the production year
B) before the accounting period begins
C) after completion of each job
D) after the preparation of financial statements for the year

E) A) and D)
F) All of the above

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Question 73

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Broxsie Fabrication,Inc.issued $60,000 of direct materials and $15,500 of indirect materials to production.Prepare the journal entry to record the transaction.

Island Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances.Island has four public relations specialists and office staff.At the beginning of the year,Island estimated the total cost of salaries and benefits for the public relations specialists at $663,000 and a total of 7,800 billable hours for the year.The office and administrative costs were estimated at $390,000.The allocation base for office and administrative costs is billable hours.In June,Island signed a contract for a Russian ballet performance.It negotiated a price of $6,300 for its services.When the job was complete,Island's records showed that it had logged 37.0 billable hours.What was the actual total cost of the job for Island?

Manufacturing overhead is allocated by debiting the Finished Goods Inventory account.

On January 1,Feldstein Manufacturing had a beginning balance in Work-in-Process Inventory of $82,400 and a beginning balance in Finished Goods Inventory of $20,500.During the year,Feldstein incurred manufacturing costs of $350,700. During the year,the following transactions occurred: Job A-12 was completed for a total cost of $120,000 and was sold for $125,500. Job A-13 was completed for a total cost of $200,100 and was sold for $210,800. Job A-15 was completed for a total cost $66,000 but was not sold as of year-end. What was the balance in Finished Goods Inventory at the end of the year?

On January 1,Frederic Manufacturing had a beginning balance in Work-in-Process Inventory of $161,000 and a beginning balance in Finished Goods Inventory of $24,000.During the year,Frederic incurred manufacturing costs of $203,000. During the year,the following transactions occurred: Job C-62 was completed for a total cost of $142,000 and was sold for $157,000. Job C-63 was completed for a total cost of $181,000 and was sold for $214,000. Job C-64 was completed for a total cost $84,000 but was not sold as of year-end. The Manufacturing Overhead account had an unadjusted credit balance of $25,000 and was adjusted to zero at year-end. What was the final balance in the Cost of Goods Sold account?

The journal entry to record indirect labor costs incurred involves a debit to the ________.

Overallocated manufacturing overhead occurs when the manufacturing overhead allocated to Work-in-Process Inventory is less than the amount actually incurred.

Doric Agricultural Corporation uses a predetermined overhead allocation rate based on the direct labor cost.The manufacturing overhead cost allocated during the year is $280,000.The details of production and costs incurred during the year are as follows: $\begin{array} { | l | r | } \hline \text { Actual direct materials cost } & \$ 812,000 \\\hline \text { Actual direct labor cost } & \$ 180,000 \\\hline \text { Actual overhead costs incurred } & \$ 264,000 \\\hline \text { Total direct labor hours } & 5,600 \text { hours } \\\hline\end{array}$ What is the predetermined overhead allocation rate applied by the corporation? (Round your answer to two decimal places.)

Hosanna Furnishings finished Job A40,which involved $4,000 of direct materials and $600 of direct labor.Hosanna uses a predetermined overhead allocation rate based on 40% of direct labor costs.Provide the journal entry needed to record the completion of the job.

Process costing rather than job order costing is more appropriate for service companies.

Littleton Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances.Littleton has four public relations specialists and office staff.At the beginning of 2016,Littleton estimated the total cost of salaries and benefits for the public relations specialists at $660,000 and a total of 7,500 billable hours for the year.The office and administrative costs were estimated at $390,000.The allocation base for office and administrative costs is billable hours.A new client is contracting with Littleton to promote a ballet tour in the United States Littleton estimates that the job will require 40 billable hours of specialist time.If Littleton wishes to have a 25% mark up on cost on the job,what price should Littleton quote to the client?

Midtown,Inc.uses a predetermined overhead allocation rate of $68 per direct labor hour.In January,the company completed Job A23 which utilized 24 direct labor hours.Which of the following correctly describes the journal entry to allocate overhead to the job?

Manufacturing overhead costs allocated to a job amounted to $491,000.The actual manufacturing costs incurred during the year were $580,000.Overhead costs have been underallocated.

Job order costing is well suited for the service industry.

At the end of the year,Delta,Inc.has an unadjusted debit balance in the Manufacturing Overhead account of $3,950.Provide the year-end adjusting entry needed to adjust the account.

At the beginning of the year,Tea Tree Manufacturing had the following account balances: The following additional details are provided for the year: $\begin{array} { | l | r | } \hline \text { Direct materials placed in production } & \$ 82,400 \\\hline \text { Direct labor incurred } & 192,000 \\\hline \text { Manufacturing overhead incurred } & 301,500 \\\hline \begin{array} { l } \text { Manufacturing overhead allocated to } \\\text { production }\end{array} & 295,200 \\\hline \text { Cost of jobs completed and transferred } & 500,800 \\\hline\end{array}$ The unadjusted balance in the Manufacturing Overhead account is a ________.

Seal Financial Advisors provides accounting and finance assistance to customers in the retail business.Seal has four professionals on staff and an office with six clerical staff.Total compensation,including benefits,for the professional staff runs about $572,000 per year,and normal billable hours are 8,000 hours per year.The professional staff keep detailed time sheets organized by client number.The total office and administrative costs for the year are $754,000.Seal allocates office and administrative costs to clients monthly,using a predetermined overhead allocation rate based on billable hours.What is the predetermined overhead allocation rate that Seal will use for office and administrative costs? (Round your answer to the nearest cent.)

On June 30,Greenville,Inc.finished Job 70 with total job costs of $40,000 and transferred the costs to Finished Goods Inventory.On July 6,Greenville completed the sale of the goods to a customer for $55,000 on account.Provide the entry to record the cost of goods sold.