Exam 3: Product Costing and Cost Accumulation in a Batch Production Environment

Dancer Corporation,which uses a job-costing system,had two jobs in process at the start of 20x1: job no.59 ($95,000)and job no.60 ($39,500).The following information is available: · The company applies manufacturing overhead on the basis of machine hours.Budgeted overhead and machine activity for the year were anticipated to be $720,000 and 20,000 hours,respectively. · The company worked on three jobs during the first quarter.Direct materials used,direct labor incurred,and machine hours consumed were: A.Determine the company's predetermined overhead application rate. A.Predetermined overhead rate: $720,000 /20,000 hours = $36 per machine hour B. B.Prepare journal entries as of March 31 to record the following.(Note: Use summary entries where appropriate by combining individual job data. ) 1.The issuance of direct material to production,and the direct labor incurreD. 2.The manufacturing overhead incurred during the quarter. 3.The application of manufacturing overhead to production. 4.The completion of job no.59 and no.60. 5.The sale of job no.59.

Boxworth and Associates designs relatively small sports stadiums and arenas at various sites throughout the country.The firm's accountant prepared the following budget for the upcoming year: A.Determine Boxworth's overhead for the year and the firm's predetermined overhead application rate.The rate is based on costs directly chargeable to firm projects. B.Compute the cost of the Charlotte County arena project as of year-end. C.Possible examples include travel,overnight delivery fees,postage,selected costs related to conducting focus-group studies,photocopying,and supplies related to model construction. C.Present three examples of "other operating costs" that might be directly traceable to the Charlotte County project.

Discuss the reason for (1)allocating overhead to the cost of production jobs,and (2)applying overhead using a predetermined rate instead of an actual overhead rate.

Harris,Inc. ,has just completed job nos.78 and 79,which were similar in terms of complexity,production processes,and units manufactured.Job no.78 was manufactured by Joe Barton who earns $14 per hour,whereas job no.79 was completed by Susan Franklin who earns $20 per hour.If Joe and Susan are equally efficient,would the company be better off using direct labor cost or direct labor hours as the cost driver in its predetermined overhead rate? Briefly explain.

Electricity costs that were incurred by a company's production processes should be debited to:

When using normal costing,the total production cost of a job is composed of:

Which of the following statements regarding work in process is not correct?

If the amount of effort and attention to products varies substantially throughout a company's various manufacturing operations,the company might consider the use of:

If a company sells goods that cost $80,000 for $92,000,the firm will:

The following information relates to October: Production supervisor's salary: $3,500 Factory maintenance wages: 250 hours at $10 per hour The journal entry to record the preceding information is:

Quatro Products started and finished job no.C19 during June.The job required $15,000 of direct material and 75 hours of direct labor at $12 per hour.The predetermined overhead rate is $16 per direct labor hour. During June,direct materials requisitions for all jobs totaled $149,000;the total direct labor hours and cost were 6,200 hours at $12 per hour;and the total cost of jobs completed was $337,500.All of these figures include data that pertain to job no.C19. Required: A.Prepare journal entries that summarize June's total activity. B.Determine the cost of job no.C19.

Throughout the accounting period,the credit side of the Manufacturing Overhead account is used to accumulate:

Which of the following statements about manufacturing cost flows is false?

Media,Inc. ,an advertising agency,applies overhead to jobs on the basis of direct professional labor hours.Overhead was estimated to be $150,000,direct professional labor hours were estimated to be 15,000,and direct professional labor cost was projected to be $225,000.During the year,Media incurred actual overhead costs of $146,000,actual direct professional labor hours of 14,500,and actual direct labor cost of $222,000.By year-end,the firm's overhead was:

Pruitt Company has developed an integrated system that coordinates the flow of all goods,services,and information into and out of the organization,working with raw material vendors as well as customers to improve service and reduce costs.The firm is said to be using:

Which of the following is the correct method to calculate a predetermined overhead rate?

The estimates used to calculate the predetermined overhead rate will virtually always:

The journal entry needed to record $5,000 of advertising for Westwood Manufacturing would include:

Finney & Associates is an interior decorating firm in Tucson.The following costs were incurred in a project to redecorate the mayor's offices:| A.Determine the total cost to redecorate the mayor's offices. B.Calculate the under- or overapplied overhead for the year.Be sure to label your answer.

Product costing in a manufacturing firm is the process of: