Exam 17: Job Order Cost Systems and Overhead Allocations

Metalworks applies manufacturing overhead on the basis of direct materials used in production.During the current period,direct materials used for Job #123 amounted to $22,545.If Metalworks' overhead rate is 0.65 of direct materials used,the overhead applied to Job #123 for the period is $15,000.

When goods are sold,a journal entry is made transferring the goods from cost of goods sold to finished goods.

An activity-based costing system would probably not be appropriate if:

A cost driver is an activity base that is highly correlated with manufacturing overhead costs.

Job order costing is appropriate for businesses that produce mass quantities of identical units using the same amount of direct materials,direct labor,and manufacturing overhead.

[The following information applies to the questions displayed below.] Capri Boat Corporation uses a job order cost system and applies overhead based on a percentage of direct labor cost.Cost flows through the Work in Process Inventory account during March are given below: Only Job #007 was still in process at the end of March and this job had been charged with $40,000 in direct materials cost. -The amount of overhead costs applied to Job #007 during March was:

Overhead application For a single product manufacturing company,all overhead must be assigned to the one product.Since this is the case,why would such a firm not simply assign actual overhead cost to production as it is incurred throughout the year?

A debit balance in the Manufacturing Overhead account at the end of the period indicates that overhead has been under-applied to jobs.

Job order cost system-journal entries Shown below is a partial list of accounts for Miles Mfg.Co. ,followed by a list of transactions.Indicate the accounts that would be debited and credited in recording each transaction by placing the appropriate account numbers in the space provided.The company uses a job order cost accounting system.

Selecting an activity base Listed below are six activity cost pools used by the Keaton Corporation: Listed below are six activity bases used by Keaton to allocate manufacturing overhead costs to products.In the space provided next to each activity base,indicate for which of the above cost pools it is a cost driver. ________ (a)Number of equipment work orders related to each product line. ________ (b)Number of direct material purchase orders related to each product line. ________ (c)Number of production runs related to each product line. ________ (d)Square feet of direct materials warehouse space occupied by each product line. ________ (e)Number of machine hours required to produce each product line. ________ (f)Square feet of production space occupied by each product line.

Management can compute the per-unit cost of finished goods accurately only when a job order cost system is in use.

Moran Company uses a job order cost system and has established a predetermined overhead application rate for the current year of 150% of direct labor cost,based on budgeted overhead of $900,000 and budgeted direct labor cost of $600,000.Job No.1 was charged with direct materials of $36,000 and with overhead of $27,000.What is the total cost of Job No.1?

The journal entry made by Canfield to record the sale of the Jefferson Apartments project to King Development Company for $5,250,000 would include:

Job order cost system Century Pools designs and builds custom pools and spas to the customer's order and uses a job order system.The predetermined overhead rate for the current year is 60% of direct labor cost. At the end of the current year,Century Pools' direct labor cost totaled $170,000 and actual overhead amounted to $105,000. A pool built for F.Becker required $32,000 of direct materials and $6,500 of direct labor.It was completed in May of the current year. (a)Compute the total cost of the Becker pool as shown on the job cost sheet at date of completion. (b)Compute the amount of under- or over-applied manufacturing overhead for Century's operations for the current year. (c)What disposition is made of over- or under-applied overhead at the end of the year? (Assume that the amount is not material. )

A job order cost system would be appropriate in the manufacturing of:

Under- and over-applied overhead What is meant by under-applied overhead? By over-applied overhead? Briefly explain each term.

Metalworks employs three assembly workers that,on average,each work 40 hours per week and earn $9 per hour.During the current accounting period,Job #543 consumed 77 hours of direct labor totaling $693.

A job cost sheet usually contains a record of each of the following except:

[The following information applies to the questions displayed below.] Capri Boat Corporation uses a job order cost system and applies overhead based on a percentage of direct labor cost.Cost flows through the Work in Process Inventory account during March are given below: Only Job #007 was still in process at the end of March and this job had been charged with $40,000 in direct materials cost. -The amount of direct materials cost charged to completed jobs during March was:

Select the best answer to complete the sentence: An effective cost accounting system should match processes that consume resources with the associated ________ in order to maintain competitive advantage.