Exam 3: Cost Accumulation for Job-Shop and Batch Production Operations

Use the following to answer questions: Before prorating overhead, the current period overhead component of Cost of Goods Sold for Wilmington Company was $230,000, while the current period overhead component of the ending inventory was $80,000. Manufacturing overhead of $310,000 was applied during the period, whereas $296,000 was actually incurred. Wilmington has no Work-in-Process inventory at the end of the period. -If the manufacturing overhead-variance is prorated between inventory and cost of goods sold, how much will be allocated to the ending inventory? (round to the nearest whole dollar)

In a job-order costing system, the entry to record the completion of jobs would be recorded with a:

A Gantt chart shows the timing, sequencing and overlapping of major project activities.

Fill in the missing items for the following inventories

Use the following to answer questions: Key: BB = Beginning Balance EB = Ending Balance -The amount that would appear in the Manufacturing Overhead account to represent overhead applied is:

Many organizations have been criticized for improprieties in assigning costs to jobs. This practice has been prevalent in the defense contracting industry where companies have been caught overstating the cost of jobs for which they were being reimbursed. Major universities have misreported grant money and have overstated costs of research projects. Required: a) Discuss three actions that can result in incorrect job costing. b) What actions can management take to ensure that proper accounting for jobs is taking place?

As output becomes more unique and separately identifiable, operation costing becomes more appropriate.

Use the following to answer questions: Mansfield Corporation estimates its manufacturing overhead costs to be $160,000 and its direct labor costs to be $320,000 for 2007. The actual manufacturing labor costs were $80,000 for job 1, $120,000 for job 2 and $160,000 for job 3 during 2007. Manufacturing overhead is applied to jobs on the basis of direct labor costs using a predetermined overhead rate. The actual manufacturing overhead cost for the year was $172,000. -The amount of overhead assigned to Job 3 during 2007 was:

Which of the following companies would most likely use a job-order costing system?

Butte Boat Company, experienced the following events during 2007: Purchased $1,800,000 of lumber and other materials for building boats. Incurred $200,000 for advertising. Paid $60,000 to have lumber transported to its factory. Had sales revenue of $6,000,000 during the year. Incurred $400,000 of general and administrative expenses. Took a periodic inventory at year-end and determined that material costing $ 400,000 was on hand. The inventory at the beginning of the year was $200,000. All costs incurred were added to the appropriate accounts. All sales were on credit. Required: Give the amounts for the following items in Butte Boat Company's Raw-Material inventory account: a) Transfers in (TI). b) Beginning balance (BB). c) Transfers out (TO). d) Ending balance (EB).

EBM is a large, publicly held Corporation. The company does about 80% of its work in government contracts. All contracts use a cost plus fixed fee basis; costs of jobs are agreed upon by contract. Any overruns will result in losses to the company. The company controller, Brendan Roche CPA, is discussing two current jobs with the Job Supervisor, Ashley Henry. Job 100 is currently coming in under budget, but due to construction problems, Job 102 is 20% overbudget. Roche is considering the possibility of having employees who work on Job 102 record their time to Job 101. Required: What are the implications of such actions?

When a company uses job-order costing, information regarding the costs of a specific job will be found in the company's general ledger.

Given the following: Beginning Balance, $12,000; Transfers Out, $25,000; Ending Balance, 9,000. What was the amount of Transfers In?

McGorry applies overhead to production at a predetermined rate of 75%, based on direct labor cost. Job 1000, the only job still in process at the end of June, has been charged with direct labor of $30,000. McGory's Manufacturing Overhead account showed a credit balance of $10,000 at the end of February 2007. Required: (a) Calculate the amount of direct materials charged to Job 1000. (b) Compute the actual overhead for February 2007. (c) Assume that McGory closes its Manufacturing Overhead account each month. McGory does not prorate the manufacturing overhead variance. Prepare the entry to close the overhead account at the end of February, 2007. McGorry Furniture Company uses a job-order cost system. The following debits (credits) appeared in the Work-in-Process account for February 2007:

Process costing treats all units processed during a time period as the output to be costed and does not separate and record costs for each unit produced.

The major difference between normal costing and standard costing is that normal costing only accounts for manufacturing costs in determining per unit cost while standard costing uses both manufacturing costs and general and administrative expenses.

A credit to the Manufacturing Overhead account represents the assignment of overhead into Work-in-Process using a predetermined overhead rate.

The entry to record the payroll for the month of June, 2007 should include: Chelsea Tool Corporation, a machine-tool manufacturing company, incurred the following wage costs on employees during June, 2007:

In process costing, the units of output are relatively homogeneous and indistinguishable from one another.

The cost of goods sold account records the cost of finished jobs that have been sold during the period.