Exam 15: Job Order Costing and Analysis

Describe the flow of labor costs in a job order costing system and identify the documents used in the system.

The balance of the Factory Overhead account appears on the income statement.

Bean Company uses a job order cost system and last period incurred $70,000 of overhead and $100,000 of direct labor.Bean estimates that its overhead next period will be $65,000.The company also expects to incur $100,000 of direct labor.If Bean bases its overhead applied on direct labor cost,what should be the overhead allocation rate for the next period?

During last period,a company's direct labor cost was double the cost of its direct material used.In addition,factory overhead was $5,000 underapplied.Use the following incomplete accounts to determine the cost of direct labor:

Predetermined overhead rates are necessary because cost accountants use periodic inventory systems.

Cost accounting systems accumulate costs and then assign them to products or services.

The predetermined overhead allocation rate for Forsythe,Inc.is based on estimated direct labor costs of $400,000 and estimated factory overhead of $500,000.Actual costs incurred were: Direct materials \ 250,000 Direct labor 410,000 Indirect materials 55,000 Indirect labor 125,000 Sales commissions 50,000 Factory depreciation 170,000 Property taxes, factory 15,000 Factory utilities 35,000 Advertising 62,500 Factory equipment rental 100,000 (A.Calculate the predetermined overhead rate and calculate the overhead applied during the year. (B.Determine the amount of over- or underapplied overhead and prepare the journal entry to eliminate the over- or underapplied overhead assuming that it is not material in amount.

When a job is finished,its job cost sheet is completed and moved from the jobs in process file to the ____________________ file.

During last period,a company's overhead rate was 150% of direct labor cost.This caused factory overhead to be $10,000 overapplied.Use the following incomplete accounts to determine the cost of goods sold:

The Dina Corp.has applied overhead to jobs during the period as follows: Jobs finished and sold \ 46,000 Jobs started and in process 54,000 Jobs finished and unsold 100,000 The application of overhead has resulted in a $5,600 credit balance in the Factory Overhead account,and this amount is not material.The entry to dispose of this remaining factory overhead balance is: A. Cost of Goods Sold 5,600 Factory Overhead 5,600 B. Factory Overhead 5,600 Cost of Goods Sold 5,600 C. Factory Overhead 5,600 Goods in Process 5,600 D. Goods in Process 5,600 Factory Overhead 5,600 E. $\text { No entry is needed.}$

A job cost sheet includes:

A job cost sheet shows information about each of the following items except:

A materials requisition is a source document used by production managers to request materials for manufacturing and also used to assign materials costs to specific jobs or to overhead.

The following information is available for the Millennium Corporation for the current year: Cost of goods sold \ 292,000 Depreciation of factory equipment 25,200 Direct labor 64,750 Finished goods inventory, beginning of year 45,000 Factory insurance 11,200 Factory utilities 16,800 Goods trarsiferred from Goods in Process Inventory to Finished Goods Inventory 285,150 Indirect labor 8,400 Raw materials inventory, beginning of year 4,200 Raw materials purchas 116,200 Raw materials used in production (includes \ 7,000 of indirect materials) 121,800 Rent on factory building 22,400 Millennium Corporation uses a predetermined overhead rate of 150% of direct labor cost.Prepare journal entries for the following transactions/ and events: (a)Purchase of raw materials on account. (b)Assignment of materials costs to Goods in Process Inventory and Factory Overhead (c)Payment of Factory Payroll in cash (d)Assignment of Factory Payroll to Goods in Process Inventory and Factory Overhead (e) Recording of other factory overhead.Assume that all items other than depreciation are paid in cash. (f) Assignment of Factory Overhead to Goods in Process Inventory (g) Transfer of goods completed to Finished Goods Inventory (h) Recording cost of goods sold (i) Assignment of over- or underapplied overhead to Cost of Goods Sold

Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead allocation rate exceeds the overhead incurred during a period.

A company's overhead rate is 60% of direct labor cost.Using the following incomplete accounts,determine the cost of direct materials used:

Use the following information to compute the following items: Beginning raw materials \ 5,600 Ending raw materials 4,200 Direct labor 17,250 Raw material purchases 7,400 Depreciation on factory equipment 6,750 Factory repairs and maintenance 3,300 Beginning finished goods inventory 10,800 Ending finished goods inventory 8,900 Beginning goods in process inventory 5,350 Ending goods in process inventory 6,300 OH application rate 60\% of DL (A.Calculate the cost of materials used (B.Calculate the manufacturing costs incurred during the period. (C.Calculate the Cost of Goods Manufactured during the period. (D.Calculate the Cost of Goods Sold during the period. (E.Calculate the amount by which overhead is under- or overapplied.

If a company applies overhead to production with a predetermined rate,a credit balance in the Factory Overhead account at the end of the period means that:

Explain how a service firm,such as an advertising agency,might use job order costing.

_______________________,or customized production,produces products in response to customer orders.