Exam 15: Job Order Costing and Analysis

O.K.Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs.O.K.expects to incur $800,000 of overhead during the next period and expects to use 50,000 labor hours at a cost of $10.00 per hour.What is O.K.Company's overhead application rate?

In comparison to a general accounting system for a manufacturing company,a cost accounting system places an emphasis on:

Factory overhead is often collected and summarized in a factory overhead ledger.

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

Overapplied overhead is the amount by which actual overhead cost exceeds the overhead applied to products during the period.

Overhead is applied as a percent of direct labor costs.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:

The overhead allocation rate in Frantz Company's job order cost accounting system applies overhead based on direct labor costs.The company's manufacturing costs for the current year were: direct materials,$108,000; direct labor,$144,000; and factory overhead,$18,000.At year-end,the total cost of goods in process is $36,000,which includes $12,000 of direct labor cost.What amount of direct material cost is included in the ending goods in process inventory?

A job order cost accounting system would best fit the needs of a company that makes:

Service firms,unlike manufacturing firms,should only use actual costs when determining a selling price for their services.

The raw materials section of a job cost sheet shows the materials costs assigned to a job,but the direct labor section shows only the total hours of labor exerted by employees on the job.

Canoe Company's manufacturing accounting system uses direct labor costs to apply overhead to goods in process and finished goods inventories.Canoe Company's manufacturing costs for the year were: direct labor,$30,000; direct materials,$50,000; and factory overhead applied,$6,000.The overhead application rate was:

Job order costing is applicable to manufacturing firms only and not service firms.

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

When time ticket information is entered into the accounting system,the journal entry is a debit to Factory Payroll and a credit to Goods in Process Inventory.

The Factory Overhead account will have a credit balance at the end of a period if overhead applied during the period is greater than the overhead incurred.