Exam 2: Job Order Costing and Analysis

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.

A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Finished Goods Inventory account.

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 units transferred to finished goods is:

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

A ________ is a separate record maintained for each job.

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

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

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

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:

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.

When factory payroll for indirect labor is assigned, ________ is debited.

Job order production systems would be appropriate for companies that produce compact disks or disposable cameras.

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

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

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.

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

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.

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.

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

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.