Exam 3: A Costing Framework and Cost Allocation

The Bristol Company uses a job-order cost system. The following data were recorded for June: Overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers. Bristol's Work in Process Stock balance on June 30 was: June 1 Added During June Work in Process Direct Direct Job Number Stock Materials Labour 235 £2,500 £600 £400 236 £1,500 £800 £1,000 237 £1,000 £1,200 £1,750 238 £800 £1,500 £2,250

Loraine Company applies manufacturing overhead to jobs using a predetermined overhead rate of 70% of direct Labour cost. Any under- or overapplied overhead cost is closed to Cost of Goods Sold at the end of the month. During August, the following transactions were recorded by the company: -The balance on August 1 in the Raw Materials Stock account was:

The following journal entry would be made to apply overhead cost to jobs in a job-order costing system: Manufacturing Overhead. xxx Work in Process. xxx

Precision Company data: Actual manufacturing overhead cost incurred £84,000 Actual direct Labour hours worked 27,000 Precision Company used a predetermined overhead rate last year of £3 per direct Labour hour, based on an estimate of 24,000 direct Labour hours to be worked during the year. The under- or overapplied overhead for the year was:

Using the various documents used, outline how a job costing system works.

An averaging process is used to compute unit product costs under which of the following costing method(s)

In a job order cost system using predetermined manufacturing overhead rates, indirect materials issued into production usually are recorded as an increase in

The Bristol Company uses a job-order cost system. The following data were recorded for June: June 1 Added During June Work in Process Direct Direct Job Number Stock Materials Labour 235 £2,500 £600 £400 236 £1,500 £800 £1,000 237 £1,000 £1,200 £1,750 238 £800 £1,500 £2,250 In the previous question overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers. Assume that the company wants to recalculate the overhead rate and now wants to charge overhead to production at 75% of direct material cost. Bristol Company's cost of goods sold for June would change to: