Deck 19: Job Order Costing

Question 1

Factory overhead rate
Salvo Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct labor hours. The overhead rate is now $1,500 per direct labor hour. The design engineer thinks that this is illogical. The design engineer has stated the following:
Our accounting system doesn't make any sense to me. It tells me that every labor hour carries an additional burden of $1,500. This means that direct labor makes up only 6% of our total product cost, yet it drives all our costs. In addition, these rates give my design engineers incentives to "design out" direct labor by using machine technology. Yet, over the past years as we have had less and less direct labor, the overhead rate keeps going up and up. I won't be surprised if next year the rate is $2,000 per direct labor hour. I'm also concerned because small errors in our estimates of the direct labor content can have a large impact on our estimated costs. Just a 30-minute error in our estimate of assembly time is worth $750. Small mistakes in our direct labor time estimates really swing our bids around. I think this puts us at a disadvantage when we are going after business.
1. What is the engineer's concern about the overhead rate going "up and up"
2. What did the engineer mean about the large overhead rate being a disadvantage when placing bids and seeking new business
3. What do you think is a possible solution

Answer 1

2. The large overhead rate is a disadvantage as it inflates the overall cost of the project. Moreover, even a small mistake in estimation of labor hour, increases the total cost of the project manifolds as the overhead is charged as a percentage of labor hours. Hence, the engineer's concern that the large overhead is a concern is justified.
3. A possible solution to this problem can be to peg the overhead cost to some other cost variable instead of pegging it to labor cost. For this, a thorough analysis of cost and overhead charged on various bases has to be carried out.

Question 2

Flow of costs and income statement
Ginocera Inc. is a designer, manufacturer, and the distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 2016. In January, the company spent $600,000 to develop a late-night advertising infomercial for the new product. During 2016, the company spent $1,400,000 promoting the product through these infomercials, and $800,000 in legal costs. The knives were ready for manufacture on January 1, 2016.
Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is:

The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 250 knives.
After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife into a decorative box. The direct labor cost is $0.50 per unit.
The knives are sold to stores. Each store is given promotional materials, such as posters and aisle displays. Promotional materials cost $60 per store. In addition, shipping costs average $0.20 per knife.
Total completed production was 1,200,000 units during the year. Other information is as follows:

Factory overhead cost is applied to jobs at the rate of $800 per stamping machine hour after the knife blanks are stamped. There were an additional 25,000 stamped knives, handles, and cases waiting to be assembled on December 31, 2016.
Instructions
1. Prepare an annual income statement for the Kitchen Ninja knife series, including supporting calculations, from the information provided.
2. Determine the balances in the work in process and finished goods inventories for the Kitchen Ninja knife series on December 31, 2016.

Answer 2

(1) Prepare the income statement for K N K series including supporting calculations:
The income statement should be prepared in the following steps:
(a) Determine the gross profit by deducting the cost of goods sold from the sales.
(b) Deduct the selling and administration expenses from gross margin to determine the income from operations.
Prepare the income statement as below: Supporting Calculations:
The supporting calculations should be as under: (2)Determine the balance in work-in process inventory and finished goods as on December 31, 2016:
Work in process inventory:
Balance in work in process inventory is determined by multiplying the ending balance of units in work in process with the sum of direct materials and factory overhead as below: Hence, the balance of work in process inventory is $230,000 on December 31, 2016.
Finished goods inventory:
Balance in finished goods inventory is determined by multiplying the ending balance of units in finished goods with the manufacturing cost per unit as below: Hence, the balance of finished goods inventory is $776,000 on December 31, 2016.
Note:
It should be noted that the cost of materials and copying have already been applied to 25,000 units. Hence, only the direct assembly labor should be applied for these units.

Question 3

Financial statements of a manufacturing firm
The following events took place for Chi-Lite Inc. during June 2016, the first month of operations as a producer of road bikes:
• Purchased $400,000 of materials.
• Used $343,750 of direct materials in production.
• Incurred $295,000 of direct labor wages.
• Applied factory overhead at a rate of 75% of direct labor cost.
• Transferred $815,000 of work in process to finished goods.
• Sold goods with a cost of $789,000.
• Sold goods for $1,400,000.
• Incurred $316,000 of selling expenses.
• Incurred $125,000 of administrative expenses.
a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method.
b. Determine the inventory balances at the end of the first month of operations.

Answer 3

(a).
Prepare the June Income Statement for CL assuming CL uses perpetual inventory method:
This statement is also called as statement of revenue and expense. Income statement is one of the three financial statements. Company's financial performance for one accounting cycle is measured by this income statement. In this statement, total expenses are subtracted from total revenues to arrive the net profit or net loss for a particular period.
Prepare an income statement using the following steps:
• An income statement reports the results of business transactions over a period. Usually for a month or a year.
• In the income statement total expenses are deducted from total revenues.
• When the total revenue exceeds total expenses over the period, the result is net income.
• When the total expenses exceed total revenue over the period, the result is net loss.
Prepare the income statement as below: Hence, income from operations for the month of June is $170,000.
(b).
Calculate the ending balance of inventory at the end of first month of operations:
The ending balance of inventory at the end of first month of operations is the difference between the raw materials purchased and the units used in production calculated as below: Working Note:

Question 4

Which account is used in the job order cost system to accumulate direct materials, direct labor, and factory overhead applied to production costs for individual jobs

Question 5

Flow of costs and income statement
Technology Accessories Inc. is a designer, manufacturer, and distributor of accessories for consumer electronic products. Early in 2016, the company began production of a leather cover for tablet computers, called the iLeather. The cover is made of stitched leathers with a velvet interior and fits snuggly around most tablet computers. In January, $750,000 spent on developing marketing and advertising materials. For the first six months of 2016, the company spent $1,400,000 promoting the iLeather. The product was ready for manufacture on January 21, 2016.
Technology Accessories Inc. uses a job order cost system to accumulate costs for the the iLeather. Direct materials unit costs for the iLeather are as follows:

The actual production process for the iLeather is fairly straightforward. First, leather is brought to a cutting and stitching machine. The machine cuts the leather and stitches an exterior edge into the product. The machine requires one Hour per 125 iLeathers.
After the iLeather is cut and stitched, it is brought to assembly, where assembly personnel affix the velvet interior and pack the iLeather for shipping. The direct labor cost for this work is $0.50 per unit.
The completed packages are then sold to retail outlets through a sales force. The sales force is compensated by a 20% commission on the wholesale price for all sales.
Total completed production was 500,000 units during the year. Other information is as follows:

Factory overhead cost is applied to jobs at the rate of $1,250 per machine hour. There were an additional 22,000 cut and stitched iLeathers waiting to be assembled on December 31, 2016.
Instructions
1. Prepare an annual income statement for the iLeather product, including supporting calculations, from the information provided.
2. Determine the balances in the finished goods and work in process inventories for the iLeather product on December 31, 2016.

Question 6

Decision making with job order costs
Alvarez Manufacturing Inc. is a job shop. The management of Alvarez Manufacturing Inc. uses the cost information from the job sheets to assess cost performance. Information on the total cost, product type, and quantity of items produced is as follows:

a. Develop a graph for each product (three graphs), with Job Number (in date order) on the horizontal axis and Unit Cost on the vertical axis. Use this information to determine Alvarez Manufacturing Inc.'s cost performance over time for the three products.
b. What additional information would you require in order to investigate Alvarez Manufacturing Inc.'s cost performance more precisely

Question 7

Cost of materials issuances under the FIFO method
An incomplete subsidiary ledger of materials inventory for May is as follows:

a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO.
b. Determine the materials inventory balance at the end of May.
c. Journalize the summary entry to transfer materials to work in process.
d. Explain how the materials ledger might be used as an aid in maintaining inventory quantities on hand.

Question 8

What is the difference between a clock card and time ticket

Question 9

Decision making with job order costs
Raneri Trophies Inc. uses a job order cost system for determining the cost to manufacture award products (plaques and trophies). Among the company's products is an engraved plaque that is awarded to participants who complete a training program at a local business. The company sells the plaques to the local business for $80 each.
Each plaque has a brass plate engraved with the name of the participant. Engraving requires approximately 30 minutes per name. Improperly engraved names must be redone. The plate is screwed to a walnut backboard. This assembly takes approximately 15 minutes per unit. Improper assembly must be redone using a new walnut backboard.
During the first half of the year, Raneri had two separate plaque orders. The job cost sheets for the two separate jobs indicated the following information:

a. Why did the cost per plaque increase from $60 to $68
b. What improvements would you recommend for Raneri Trophies Inc.

Question 10

A Factory overhead costs
During April, Almerinda Company incurred factory overhead costs as follows: indirect materials, $42,000; indirect labor, $90,000; utilities cost, $16,000; and factory depreciation, $54,000. Journalize the entry to record the factory overhead incurred during April.
B Factory overhead costs
During August, Rothchild Company incurred factory overhead costs as follows: indirect materials, $17,500; indirect labor, $22,000; utilities cost, $9,600; and factory depreciation, $17,500. Journalize the entry to record the factory overhead incurred during August.

Question 11

Entry for factory labor costs
A summary of the time tickets for the current month follows:

Journalize the entry to record the factory labor costs.

Question 12

Job order cost accounting for a service company
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:

a. Provide the journal entries for each of these transactions.
b. How much office overhead is over- or underapplied
c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.

Question 13

Managerial analysis
The controller of the plant of Minsky Company prepared a graph of the unit costs from the job cost reports for Product One. The graph appeared as follows:

How would you interpret this information What further information would you request

Question 14

Job order cost sheet
Remnant Carpet Company sells and installs commercial carpeting for office buildings. Remnant Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On October 1, 2016, Remnant Carpet Company gave Jackson Consulting an estimate of $9,450 to carpet the consulting firm's newly leased office. The estimate was based on the following data:

On October 3, Jackson Consulting signed a purchase contract, and the delivery and installation was completed on October 10.
The related materials requisitions and time tickets are summarized as follows:

Instructions
1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer.
2. Record the costs incurred, and prepare a job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that the additional meters of material used in the job were spoiled, the factory overhead rate has proven to be satisfactory, and an inexperienced employee performed the work.

Question 15

A Cost of goods sold
Hosmer Company completed 312,000 units during the year at a cost of $7,800,000. The beginning finished goods inventory was 22,000 units at $440,000. Determine the cost of goods sold for 325,000 units, assuming a FIFO cost flow.
B Cost of goods sold
Skeleton Company completed 200,000 units during the year at a cost of $3,000,000. The beginning finished goods inventory was 25,000 units at $310,000. Determine the cost of goods sold for 210,000 units, assuming a FIFO cost flow.

Question 16

Job order cost accounting for a service company
The Fly Company provides advertising services for clients across the nation. The Fly Company is presently working on four projects, each for a different client. The Fly Company accumulates costs for each account (client) on the basis of both direct costs and allocated indirect costs. The direct costs include the charged time of professional personnel and media purchases (air time and ad space). Overhead is allocated to each project as a percentage of media purchases. The predetermined overhead rate is 65% of media purchases.
On August 1, the four advertising projects had the following accumulated costs:

During August, The Fly Company incurred the following direct labor and media purchase costs related to preparing advertising for each of the four accounts:

At the end of August, both the Vault Bank and Take Off Airlines campaigns were completed. The costs of completed campaigns are debited to the cost of services account.
Journalize the summary entry to record each of the following for the month:
a. Direct labor costs
b. Media purchases
c. Overhead applied
d. Completion of Vault Bank and Take Off Airlines campaigns

Question 17

a. Name two principal types of cost accounting systems.
b. Which system provides for a separate record of each particular quantity of product that passes through the factory
c. Which system accumulates the costs for each department or process within the factory

Question 18

Job order cost sheet
Stretch and Trim Carpet Company sells and installs commercial carpeting for office buildings. Stretch and Trim Carpet Company uses a job order cost system. When a prospective customer asks for a price quote on a job, the estimated cost data are inserted on an unnumbered job cost sheet. If the offer is accepted, a number is assigned to the job, and the costs incurred are recorded in the usual manner on the job cost sheet. After the job is completed, reasons for the variances between the estimated and actual costs are noted on the sheet. The data are then available to management in evaluating the efficiency of operations and in preparing quotes on future jobs. On May 9, Stretch and Trim gave Lunden Consulting an estimate of $18,044 to carpet the consulting firm's newly leased office. The estimate was based on the following data:

On May 10, Lunden Consulting signed a purchase contract, and the carpet was delivered and installed on May 15.
The related materials requisitions and time tickets are summarize as follows:

Instructions
1. Complete that portion of the job order cost sheet that would be prepared when the estimate is given to the customer. (Round factory overhead applied to the nearest dollar.)
2. Record the costs incurred, and prepare a job order cost sheet. Comment on the reasons for the variances between actual costs and estimated costs. For this purpose, assume that the additional meters of material used in the job were spoiled, the factory overhead rate has proven to be satisfactory, and an inexperienced employee performed the work.

Question 19

Discuss how the predetermined factory overhead rate can be used in job order cost accounting to assist management in pricing jobs.

Question 20

Transactions in a job order cost system
Five selected transactions for the current month are indicated by letters in the following T accounts in a job order cost accounting system:

Describe each of the five transactions.

Question 21

Recording manufacturing costs
Todd Lay just began working as a cost accountant for Enteron Industries Inc., which manufactures gift items. Todd is preparing to record summary journal entries for the month. Todd begins by recording the factory wages as follows:

Then the factory depreciation:

Todd's supervisor, Jeff Fastow, walks by and notices the entries. The following conversation takes place:
Jeff: That's a very unusual way to record our factory wages and depreciation for the month.
Todd: What do you mean This is exactly the way we were taught to record wages and depreciation in school. You know, debit an expense and credit Cash or payables, or the case of depreciation, credit Accumulated Depreciation
Jeff: Well, It's not the credits I'm concerned about. It's the debits-I don't think you've recorded the debits correctly. I wouldn't mind if you were recording the administrative wages or office equipment depreciation this way, but I've got real questions about recording factory wages and factory machinery depreciation this way.
Todd: Now I'm really confused. You mean this is correct for administrative costs, but not for factory costs Well, what am I supposed to do-and why
1. Play the role of Jeff and answer Todd's questions.
2. Why would Jeff accept the journal entries if they were for administrative costs

Question 22

Entry for factory labor costs
The weekly time tickets indicate the following distribution of labor hours for three direct labor employees:

The direct labor rate earned per hour by the three employees is as follows:

The process improvement category includes training, quality improvement, and other indirect tasks.
a. Journalize the entry to record the factory labor costs for the week.
b. Assume that Jobs 301 and 302 were completed but not sold during the week and that Job 303 remained incomplete at the end of the week. How would the direct labor costs for all three jobs be reflected on the financial statements at the end of the week

Question 23

A Issuance of materials
On April 6, Almerinda Company purchased on account 60,000 units of raw material at $12 per unit. On April 21, raw materials were requisitioned for production as follows: 25,000 units for Job 50 at $10 per unit and 27,000 units for Job 51 at $12 per unit. Journalize the entry on April 6 to record the purchase and on April 21 to record the requisition from the materials storeroom.
B Issuance of materials
On August 4, Rothchild Company purchased on account 12,000 units of raw material at $14 per unit. On August 24, raw materials were requisitioned for production as follows: 5,000 units for Job 40 at $8 per unit and 6,200 units for Job 42 at $14 per unit. Journalize the entry on August 4 to record the purchase and on August 24 to record the requisition from the materials storeroom.

Question 24

What document is the source for (a) debiting the accounts in the materials ledger and (b) crediting the accounts in the materials ledger

Question 25

a. How is a predetermined factory overhead rate calculated
b. Name three common bases used in calculating the rate.

Question 26

Entries for costs in a job order cost system
DiSalvio Co. uses a job order cost system. The following data summarize the operations related to production for May:
a. Materials purchased on account, $634,000.
b. Materials requisitioned, $646,200, of which $74,500 was for general factory use.
c. Factory labor used, $660,200, of which $91,200 was indirect.
d. Other costs incurred on account for factory overhead, $147,500; selling expenses, $234,000; and administrative expenses, $146,400.
e. Prepaid expenses expired for factory overhead were $29,200; for selling expenses, $26,800; and for administrative expenses, $18,000.
f. Depreciation of office building was $84,600; of office equipment, $43,340; and of factory equipment, $32,000.
g. Factory overhead costs applied to jobs, $362,000.
h. Jobs completed, $1,002,000.
i. Cost of goods sold, $890,000.
Instructions
Journalize the entries to record the summarized operations.

Question 27

Entry for issuing materials
Materials issued for the current month are as follows:

Journalize the entry to record the issuance of materials.

Question 28

Entries for direct labor and factory overhead
Dash Industries Inc. manufactures recreational vehicles. Dash uses a job order cost system. The time tickets from April jobs are summarized as follows:

Factory overhead is applied to jobs on the basis of a predetermined overhead rate of $25 per direct labor hour. The direct labor rate is $50 per hour.
a. Journalize the entry to record the factory labor costs.
b. Journalize the entry to apply factory overhead to production for April.

Question 29

Entries for costs in a job order cost system
Royal Technology Company uses a job order cost system. The following data summarize the operations related to production for March:
a. Materials purchased on account, $770,000.
b. Materials requisitioned, $680,000, of which $75,800 was for general factory use.
c. Factory labor used, $756,000, of which $182,000 was indirect.
d. Other costs incurred on account for factory overhead, $245,000; selling expenses, $171,500; and administrative expenses, $110,600.
e. Prepaid expenses expired for factory overhead were $24,500; for selling expenses, $28,420; and for administrative expenses, $16,600.
f. Depreciation of factory equipment was $49,500; of office equipment, $61,800; and of office building, $14,900.
g. Factory overhead costs applied to jobs, $568 f 500.
h. Jobs completed, $1,500,000.
i. Cost of goods sold, $1375,000.
Instruction
Journalize the entries to record the summarized operations.

Question 30

A Applying factory overhead
Almerinda Company estimates that total factory overhead costs will be $1,750,000 for the year. Direct labor hours are estimated to be 500,000. For Almerinda Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity base, (b) determine the amount of factory overhead applied to Jobs 50 and 51 in April using the data on direct labor hours from Practice Exercise 19-2A, and (c) prepare the journal entry to apply factory overhead to both jobs in April according to the predetermined overhead rate.
B Applying factory overhead
Rothchild Company estimates that total factory overhead costs will be $810,000 for the year. Direct labor hours are estimated to be 90,000. For Rothchild Company, (a) determine the predetermined factory overhead rate using direct labor hours as the activity base, (b) determine the amount of factory overhead applied to Jobs 40 and 42 in August using the data on direct labor hours from Practice Exercise 19-2B, and (c) prepare the journal entry to apply factory overhead to both jobs in August according to the predetermined overhead rate.

Question 31

a. What is (1) overapplied factory overhead and (2) underapplied factory overhead
b. If the factory overhead account has a debit balance, was factory overhead underapplied or overapplied
c. If the factory overhead account has a credit balance at the end of the first month of the fiscal year, where will the amount of this balance be reported on the interim balance sheet

Question 32

Job order decision making and rate deficiencies
RIRA Company makes attachments such as backhoes and grader and bulldozer blades for construction equipment. The company uses a job order cost system. Management is concerned about cost performance and evaluates the job cost sheets to learn more about the cost effectiveness of the operations. To facilitate a comparison, the cost sheet for Job 206 (50 backhoe buckets completed in October) was compared with Job 228, which was for 75 backhoe buckets completed in December. The two job cost sheets follow:


Management is concerned with the increase in unit costs over the months from October to December. To understand what has occurred, management interviewed the purchasing manager and quality manager.
Manager: Prices have been holding steady for our raw materials during the first half of the year. I found a new supplier for our bulk steel that was willing to offer a better price than we received in the past. I saw these lower steel prices and jumped at them, knowing that a reduction in steel prices would have a very favorable impact on our costs.
Quality Manager: Something happened around mid-year. All of a sudden, we were experiencing problems with respect to the quality of our steel. As a result, we've been having all sorts of problems on the shop floor in our foundry and welding operation.
1. Analyze the two job cost sheets and identify why the unit costs have changed for the backhoe buckets. Complete the following schedule to help in your analysis:

2. How would you interpret what has happened in light of your analysis and the interviews

Question 33

Analyzing manufacturing cost accounts
Fire Rock Company manufactures designer paddle boards in a wide variety of sizes and styles. The following incomplete ledger accounts refer to transactions that are summarized for June:

In addition, the following information is available:
a. Materials and direct labor were applied to six jobs in June:

b. Factory overhead is applied to each job at a rate of 140% of direct labor cost.
c. The June 1 Work in Process balance consisted of two jobs, as follows:

d. Customer jobs completed and units sold in June were as follows:

Instructions
1. Determine the missing amounts associated with each letter. Provide supporting calculations by completing a table with the following headings:

2. Determine the June 30 balances for each of the inventory accounts and factory overhead.

Question 34

Factory overhead rates, entries, and account balance
Tiny Biggs Company operates two factories. The company applies factory overhead to jobs on the basis of machine hours in Factory 1 and on the basis of direct labor hours in Factory 2. Estimated factory overhead costs, direct labor hours, and machine hours are as follows:

a. Determine the factory overhead rate for Factory 1.
b. Determine the factory overhead rate for Factory 2.
c. Journalize the entries to apply factory overhead to production in each factory for September.
d. Determine the balances of the factory overhead accounts for each factory as of September 30, and indicate whether the amounts represent overapplied or underapplied factory overhead.

Question 35

What kind of firm would use a job order cost system

Question 36

Analyzing manufacturing cost accounts
Clapton Company manufactures custom guitars in a wide variety of styles. The following incomplete ledger accounts refer to transactions that are summarized for May:

In addition, the following information is available:
a. Materials and direct labor were applied to the following jobs in May:

b. Factory overhead is applied to each job at a rate of 50% of direct labor cost.

c. The May 1 Work in Process balance consisted of two jobs, as follows:
d. Customer jobs completed and units sold in May were as follows:

Instructions
1. Determine the missing amounts associated with each letter. Provide supporting calculations by completing a table with the following headings:

2. Determine the May 31 balances for each of the inventory accounts and factory overhead.

Question 37

Describe how a job order cost system can be used for professional service businesses.

Question 38

Cost flow relationships
The following information is available for the first month of operations of Kellman Inc., a manufacturer of art and craft items:

Using this information, determine the following missing amounts:
a. Cost of goods sold
b. Direct materials cost
c. Direct labor cost

Question 39

Predetermined overhead rates
As an assistant cost accountant for Mississippi Industries, you have been assigned to review the activity base for the predetermined factory overhead rate. The president, Tony Favre, has expressed concern that the over- or underapplied overhead has fluctuated excessively over the years.
An analysis of the company's operations and use of the current overhead rate (direct labor cost) has narrowed the possible alternative overhead bases to direct labor cost and machine hours. For the past five years, the following data have been gathered:

In teams:
1. Calculate a predetermined factory overhead rate for each alternative base, assuming that rates would have been determined by relating the total amount of factory overhead for the past five years to the base.
2. For each of the past five years, determine the over- or underapplied overhead based on the two predetermined overhead rates developed in part (1).
3. Which predetermined overhead rate would you recommend Discuss the basis for your recommendation.

Question 40

Predetermined factory overhead rate
Spring Street Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows:

The average shop direct labor rate is $30 per hour.
Determine the predetermined shop overhead rate per direct labor hour.

Question 41

A Direct labor costs
During April, Almerinda Company accumulated 20,000 hours of direct labor costs on Job 50 and 24,000 hours on Job 51. The total direct labor was incurred at a rate of $20.00 per direct labor hour for Job 50 and $22.00 per direct labor hour for Job 51. Journalize the entry to record the flow of labor costs into production during April.
B Direct labor costs
During August, Rothchild Company accumulated 3,500 hours of direct labor costs on Job 40 and 4,200 hours on Job 42. The total direct labor was incurred at a rate of $25.00 per direct labor hour for Job 40 and $23.50 per direct labor hour for Job 42. Journalize the entry to record the flow of labor costs into production during August.

Question 42

What is a job cost sheet

Question 43

Predetermined factory overhead rate
Poehling Medical Center has a single operating room that is used by local physicians to perform surgical procedures. The cost of using the operating room is accumulated by each patient procedure and includes the direct materials costs (drugs and medical devices), physician surgical time, and operating room overhead. On January 1 of the current year, the annual operating room overhead is estimated to be:

The overhead costs will be assigned to procedures, based on the number of surgical room hours. Poehling Medical Center expects to use the operating room an average of eight hours per day, seven days per week. In addition, the operating room will be shut down two weeks per year for general repairs.
a. Determine the predetermined operating room overhead rate for the year.
b. Bill Harris had a five-hour procedure on January 22. How much operating room overhead would be charged to his procedure, using the rate determined in part (a)
c. During January, the operating room was used 240 hours. The actual overhead costs incurred for January were $67,250. Determine the overhead under- or overapplied for the period.

Question 44

Entries and schedules for unfinished jobs and completed jobs
Tybee Industries Inc. uses a job order cost system. The following data summarize the operations related to production for January 2016, the first month of operations:
a. Materials purchased on account, $29,800.
b. Materials requisitioned and factory labor used:

c. Factory overhead costs incurred on account, $5,500.
d. Depreciation of machinery and equipment, $1,980.
e. The factory overhead rate is $54 per machine hour. Machine hours used:

f. Jobs completed; 301, 302, 303 and 305.
g. Jobs were shipped and customers were billed as follows: Job 301, $8,250; Job 302, $11,200; Job 303, $15,000.
Instructions
1. Journalize the entries to record the summarized operations.
2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.
3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.
4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.

Question 45

Entries for materials
Eclectic Ergonomics Company manufacturers designer furniture. Eclectic Ergonomics uses a job order cost system. Balances on April 1 from the materials ledger are as follows:

The materials purchased during April are summarized from the receiving reports as follows:

Materials were requisitioned to individual jobs as follows:

The glue is not a significant cost, so it is treated as indirect materials (factory overhead).
a. Journalize the entry to record the purchase of materials in April.
b. Journalize the entry to record the requisition of materials in April.
c. Determine the April 30 balances that would be shown in the materials ledger accounts.

Question 46

Entry for jobs completed; cost of unfinished jobs
The following account appears in the ledger prior to recognizing the jobs completed in August:

Jobs finished during August are summarized as follows:

a. Journalize the entry to record the jobs completed.
b. Determine the cost of the unfinished jobs at August 31.

Question 47

Entries and schedules for unfinished jobs and completed jobs
Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April 2016, the first month of operations:
a. Materials purchased on account, $147,000.
b. Materials requisitioned and factory labor used:

c. Factory overhead costs incurred on account, $6,000.
d. Depreciation of machinery and equipment, $4,100.
e. The factory overhead rate is $40 per machine hour. Machine hours used:

f. Jobs completed: 101, 102, 103, and 105.
g. Jobs were shipped and customers were billed as follows: Job 101, $62,900; Job 102, $80,700; Job 105, $45,500.
Instructions
1. Journalize the entries to record the summarized operations.
2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.
3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.
4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.

Question 48

A Job costs
At the end of April, Almerinda Company had completed Jobs 50 and 51. Job 50 is for 23,040 units, and Job 51 is for 26,000 units. Using the data from Practice Exercises 19-1A, 19-2A, and 19-4A, determine (a) the balance on the job cost sheets for Jobs 50 and 51 at the end of April and (b) the cost per unit for Jobs 50 and 51 at the end of April.
B Job costs
At the end of August, Rothchild Company had completed Jobs 40 and 42. Job 40 is for 10,000 units, and Job 42 is for 11,000 units. Using the data from Practice Exercises 19-1B, 19-2B, and 19-4B, determine (a) the balance on the job cost sheets for Jobs 40 and 42 at the end of August and (b) the cost per unit for Jobs 40 and 42 at the end of August.

Question 49

Entries for factory costs and jobs completed
Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $8,000 of indirect materials and $12,400 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Journalize the summary entry to record each of the following operations for January (one entry for each operation):
a. Direct and indirect materials used.
b. Direct and indirect labor used.
c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).
d. Completion of Jobs 301 and 302.