Exam 3: Product Costing and Cost Accumulation

Which of the following statements about the use of direct labour as a cost driver is false?

In a job-order costing system, the journal entry to record the application of overhead cost to jobs includes which of the following?

Dexter Corporation, which uses a job-costing system, had two jobs in process at the start of 20 x 1: 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 labour incurred, and machine hours consumed were: Job No. Direct Material Direct Labour Machine Hours 59 \ 18,000 \ 45,000 900 60 -0- 25,000 600 61 37,000 35,000 1,200 Manufacturing overhead during the first quarter included charges for depreciation ($20,000), indirect labour ($50,000), indirect materials used ($4,000), and other factory costs ($108,700). Dexter completed job no. 59 and job no. 60. Job no. 59 was sold for cash, producing a profit of $24,600 for the firm. Required: A. Determine the company's predetermined overhead application rate. 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 labour 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.

Limestone Garments started and finished job no. 125 during March. The job required $30,000 of direct material and 100 hours of direct labour at $15 per hour. The predetermined overhead rate is $20 per direct labour hour. During March, direct materials requisitions for all jobs totalled $300,000; the total direct labour hours and cost were 8,000 hours at $15 per hour; and the total cost of jobs completed was $400,000. All of these figures include data that pertain to job no. 125. Required: A. Prepare journal entries that summarize March's's total activity for Limestone Garments. B. Determine the cost of job no. 125. C. Assuming no opening balance, if actual manufacturing overhead costs for Limestone for the period totaled $200,000 was overhead over or underapplied and by how much?

The term "normal costing" refers to the use of:

Conrad Industries uses a predetermined overhead application rate of $25 per labour hour. A review of the company's accounting records revealed budgeted manufacturing overhead for the period of $700,000, applied manufacturing overhead of $640,900, and overapplied overhead of $12,400. Required: A. Determine Conrad's actual labour hours, budgeted labour hours, and actual manufacturing overhead. B. Present the necessary year-end journal entry to handle the overapplied overhead, assuming that the company allocates over- or underapplied overhead to Cost of Goods Sold.

The Little Britain Company applies overhead cost based on machine hours. At the beginning of 2011, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. By 2011 year-end, actual overhead totalled $525,000, and actual machine hours were 25,000. On the basis of this information, the 2011 predetermined overhead rate was:

Which of the following statements about material requisitions is false?

Athens Corporation uses a job-cost system and applies manufacturing overhead to products on the basis of machine hours. The company's accountant estimated that overhead and machine hours would total $800,000 and 50,000, respectively, for 20 x 1. Actual costs incurred follow. Direct material used \ 250,000 Direct labour 300,000 Manufacturing overhead 816,000 The manufacturing overhead figure presented above excludes $27,000 of sales commissions incurred by the firm. An examination of job-cost records revealed that 18 jobs were sold during the year at a total cost of $2,960,000. These goods were sold to customers for $3,720,000. Actual machine hours worked totaled 51,500, and Athens adjusts under- or overapplied overhead at year-end to Cost of Goods Sold. Required: A. Determine the company's predetermined overhead application rate. B. Determine the amount of under- or overapplied overhead at year-end. Be sure to indicate whether overhead was under- or overapplied. C. Compute the company's cost of goods sold. D. What alternative accounting treatment could the company have used at year-end to adjust for under- or overapplied overhead? Is the alternative that you suggested appropriate in this case? Why?

As production takes place, all manufacturing costs are added to:

If a company sells goods that cost $70,000 for $82,000, the firm will:

The final step in recognizing the completion of production requires a company to:

Ferndale Manufacturing Company applies overhead at the rate of 190% of direct labour cost. During July 2011, Ferndale began work on job no. 101. The job was completed in August and sold during September, It accumulated direct material and labour charges of $27,000 and $15,000, respectively. On the basis of this information, the total overhead applied to job no. 101 is:

Yole Manufacturing Company has just completed job nos. C14 and C15, which were similar in terms of complexity, production processes, and units manufactured. Job no. C14 was manufactured by Scott Moore who earns $22 per hour, whereas job no. C15 was completed by Cathy Ferguson who earns $30 per hour. If Scott and Cathy are equally efficient, would the company be better off using direct labour cost or direct labour hours as the cost driver in its predetermined overhead rate? Briefly explain.

Blizzard Corporation sells a number of products to groups that provide educational workshops and seminars. One of the products involves a combination leather case and note pad. The company purchases the case and pad combination from a supplier and encloses a $3 pen that contains the educational groups' name and logo. Blizzard began to carry this product at the start of 2011 by acquiring 12,500 cases from Executive Supply for $87,500 along with an identical number of pens from Accent Goods. During 2011, 9,500 of the cases and pens were issued to TBlizzard's assembly operation where the pen is added. Eighty percent of these cases were completed as of December 31, and a review of the December 31 finished-goods inventory found 2,600 completed cases in the warehouse. Conversations with salespeople revealed that 70 finished sets were used in various company marketing activities throughout the year. Required: A. Determine the cost of the cases and pens that would appear in Blizzard's raw materials, work in process, and finished-goods inventory as of December 31. B. Determine the cost of the cases and pens that would appear in Blizzard's cost of goods sold for 2011.

A manufacturing firm produces goods in accordance with customer specifications, commencing production upon receipt of a purchase order. To accumulate the cost of each order, the company would use a(n):

Blarney Stone Company applies manufacturing overhead by using a predetermined rate of 150% of direct labour cost. For Job No 470, the direct material costs and the direct labour costs were $60,000 and $40,000, respectively. If Blarney Stone adds a 30% markup on total cost to generate a profit, which of the following is the best depiction of a portion of the accounting needed to record the sale of Job No. 470?

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

A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000. Which of the following options correctly expresses the accounts that are debited and credited to record this transaction?

Which of the following statements about materials is false?