Exam 6: Fundamentals of Product and Service Costing

Job 599 was recently completed. The following data have been recorded on its job cost sheet: Direct materials \ 40,610 Direct labor-hours Direct labor wage rate \1 1 per DLH Number of units completed 3,100 units The company applies manufacturing overhead on the basis of direct labor-hours. The predetermined overhead rate is $20 per direct labor-hour. Required: Compute the unit product cost that would appear on the job cost sheet for this job.

How does job costing differ from process costing?

Airborne Industries uses a two-stage allocation method to assign costs to its products. The following information has been provided for the month: Required: (a) Allocate the manufacturing overhead to two cost pools: machine-related and labor-related. (b) Compute the predetermined overhead rate for the two pools, using machine hours and direct labor hours as the bases. (c) Compute the total costs of production for each of the three products.

The basic cost flow model applies only to physical units and not to costs.

Silverton Manufacturing Company builds highly sophisticated engine parts for cars competing in stock racing and drag racing. The company uses a normal costing system that applies factory overhead on the basis of direct labor-hours. For 2020, the company estimated that it would incur $256,000 in factory overhead costs and 16,000 direct labor-hours. The April 1, 2020, balance in inventory accounts follow: Materials Inventory \5 4,000 Work-in-Process Inventory (Y12) \ 21,000 Finished Goods Inventory (Z11) \ 108,000 Job Y12 is the only job in process on April 1, 2020. The following transactions were recorded for the month of April: (1) Purchased materials on account, $180,000. (2) Issued $182,000 of materials to production, $8,000 of which was for indirect materials. Cost of direct materials issued: Job Y12 \ 46,000 Job D20 84,000 Job E33 44,000 (3) Incurred and paid payroll cost of $40,920; Direct labor cost ($20/hour; total 1,196 hours): Job Yl2 \ 12,220 Job D20 8,060 Job E33 3,640 Indirect labor 5,000 Selling and adrinistrative salaries 12,000 (4) Recognized depreciation for the month: Manufacturing asset $4,400 Selling and administrative asset 3,400 (5) Paid advertising expenses $12,000. (6) Incurred factory utility costs 2,600. (7) Incurred other factory overhead costs 3,200. (8) Applied factory overhead to production on the basis of direct labor-hours. (9) Completed Job Y12 during the month and transferred it to the finished goods warehouse. (10) Sold Job Z11 on account for $118,000. (11) Received $50,000 of collections on account from customers during the month. Required: (a) Calculate the company's predetermined overhead rate. (b) What was the balance of the Materials Inventory account on April 30, 2020? (c) What was the balance of the Work-in-Process Inventory control account on April 30?

Hospitals are more likely to use a process costing system than a job costing system.

Marvel Company uses a predetermined overhead rate in applying overhead to production orders on a labor-cost basis in Department A and on a machine-hours basis in Department B. At the beginning of the most recently completed year, the company made the following estimates: Dept. A Dept. B Direct labor cost \ 56,000 \ 33,000 Factory overhead \ 67,200 \ 45,000 Direct labor-hours 8,000 9,000 Machire-hours 4,000 15,000 What predetermined overhead rate would be used in Department A and Department B, respectively?

The Paris Manufacturing Company produces a single uniform product throughout the year. Which of the following product costing systems should be used by Paris?

Trippett Industries manufactures cleaning products. During the year, the company spent $600,000 on chemicals and $728,000 on conversion costs. Overhead is applied at a rate of 180% of direct labor costs. How much did the company spend on manufacturing overhead during the year?

Case (A) Case (B) Case (C) Beginning Balance (BB) \ 64,800 \ 59,840 ? Ending Balance (EB) 61,300 ? 13,800 Transferred In (TT) 189,100 79,530 65,200 Transferred Out (TO) ? 76,420 67,300 - For Case (A) above, what is the Transferred-Out (TO)?