Deck 16: Job Order and Process Costing

Question 1

General Motors and Chevron are examples of companies that use process costing.

Answer 1

True

Question 2

Job order costing is most likely used in which of the following industries?

A) Pharmaceutical manufacturing
B) Textbook publishing
C) Chemical manufacturing
D) Food and beverage manufacturing

Answer 2

Textbook publishing

Question 3

Which of the following companies is most likely to use job order costing?

A) Swenson Mobil Oil Refinery
B) Hunter's Custom Furniture Company
C) Oliver Chemical Company
D) Somody Cereal Company

Answer 3

Hunter's Custom Furniture Company

Question 4

Which of the following statements is incorrect?

A) A job order costing system is used by manufacturers of heterogeneous products.
B) A process costing system is used by manufacturers of homogeneous products.
C) A service firm would likely use a job order costing system.
D) A custom home manufacturer would likely use a process costing system.

Question 5

Which costing system would better account for a unique individual product?

A) Job order costing system
B) Product costing system
C) Process costing system
D) Variable costing system

Question 6

When indirect materials are requisitioned for a job, the work in process account is credited.

Question 7

Which of the following would be debited to record direct labor costs actually incurred?

A) Work in process
B) Manufacturing wages
C) Manufacturing overhead
D) Finished goods inventory

Question 8

Which of the following would be debited to record the requisition of indirect materials?

A) Manufacturing overhead
B) Work in process inventory
C) Materials inventory
D) Indirect materials expense

Question 9

The entry to transfer direct labor and indirect labor costs from manufacturing wages into production includes a debit to which of the following?

A) Manufacturing overhead and work in process inventory
B) Finished goods inventory and cost of goods sold.
C) Manufacturing overhead and cost of goods sold.
D) Finished goods inventory and work in process inventory.

Question 10

In job order costing, direct materials used in production are debited to which of the following?

A) Manufacturing overhead
B) Work in process inventory
C) Finished goods inventory
D) Either manufacturing overhead or work in process inventory

Question 11

In job order costing, all indirect manufacturing labor incurred is initially debited to what account?

A) Manufacturing overhead
B) Work in process inventory
C) Manufacturing wages
D) Indirect labor expense

Question 12

Allocation of direct and indirect materials requires a credit to what account?

A) Materials inventory
B) Manufacturing overhead
C) Work in process inventory
D) Finished goods inventory

Question 13

The journal entry to assign $1,500 of direct labor and $200 of indirect labor for the current period involves a debit to what account(s)?

A) Manufacturing overhead for $1,700
B) Work in process inventory for $1,500 and indirect labor expense for $200
C) Work in process inventory for $1,500 and manufacturing overhead for $200
D) Work in process inventory for $1,700

Question 14

Specialty Wood Products company had the following manufacturing labor related transactions last month:
$$\begin{array} { | l | r | } \hline \text { Woodworkers' wages } & \$ 100,000 \\\hline \text { Indirect laborers' wages } & \$ 20,000 \\\hline \text { Maintenance personnel wages } & \$ 10,000 \\\hline\end{array}$$ What is the journal entry to record the incurrence of these wages?

A)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 130,000 & \\\hline & \text { Wages payable (cash) } & & 130,000 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 130,000 & \\\hline & \text { Manufacturing wages } & & 130,000 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } \hline \text { Manufacturing wages } & & 130,000 & \\\hline & \text { Wages payable (cash) } & & 130,000 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | l | l | } \hline \text { Wages expense } & & 130,000 & \\\hline & \text { Wages payable (cash) } & & 130,000 \\\hline\end{array}$$

Question 15

Specialty Wood Products company had the following manufacturing labor related transactions last month:
$$\begin{array} { | l | r | } \hline \text { Woodworkers' wages } & \$ 100,000 \\\hline \text { Indirect laborers' wages } & \$ 20,000 \\\hline \text { Maintenance personnel wages } & \$ 10,000 \\\hline\end{array}$$ What is the journal entry to record the assignment of these wages?

A)
$$\begin{array} { | l | l | l | l | } \hline \text { Wages expense } & & 130,000 & \\\hline & \text { Wages payable (cash) } & & 130,000 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 110,000 & \\\hline \text { Wage expense } & & 20,000 & \\\hline & \text { Manufacturing wages } & & 130,000 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } \hline \text { Manufacturing wages } & & 130,000 & \\\hline & \text { Wages payable (cash) } & & 130,000 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 100,000 & \\\hline \text { Manufacturing overhead } & & 30,000 & \\\hline & \text { Manufacturing wages } & & 130,000 \\\hline\end{array}$$

Question 16

Which of the following entries would be made to record the use of $10,000 of direct materials and $5,000 of indirect materials by Jake's Custom Furniture?

A)
$$\begin{array} { | l | l | l | l | } \hline \text { Manufacturing overhead } & & 15,000 & \\\hline & \text { Materials inventory } & & 15,000 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 10,000 & \\\hline \text { Manufacturing overhead } & & 5,000 & \\\hline & \text { Materials inventory } & & 15,000 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } \hline \text { Materials inventory } & & 15,000 & \\\hline & \text { Work in process inventory } & & 15,000 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 15,000 & \\\hline & \text { Materials inventory } & & 15,000 \\\hline\end{array}$$

Question 17

Which of the following entries would be made to assign $10,000 of manufacturing labor to jobs, 70% of which was direct labor and 30% of which was indirect labor?

A)
$$\begin{array} { | l | l | l | l | } \hline \text { Manufacturing overhead } & & 10,000 & \\\hline & \text { Manufacturing wages } & & 10,000 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 7,000 & \\\hline \text { Manufacturing overhead } & & 3,000 & \\\hline & \text { Manufacturing wages } & & 10,000 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } \hline \text { Manufacturing wages } & & 10,000 & \\\hline & \text { Work in process inventory } & & 7,000 \\\hline & \text { Manufacturing overhead } & & 3,000 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 10,000 & \\\hline & \text { Manufacturing wages } & & 10,000 \\\hline\end{array}$$

Question 18

The journal entry to record $200 of depreciation on factory equipment used in production for the current period involves which of the following?

A) A debit to accumulated depreciation-factory equipment for $200
B) A credit to manufacturing overhead for $200
C) A debit to depreciation expense-factory equipment for $200
D) A debit to manufacturing overhead for $200

Question 19

Which of the following statements is incorrect?

A) Direct material costs are allocated to the manufacturing process as the materials are used.
B) Direct labor costs are allocated to the manufacturing process as they are incurred.
C) Actual indirect labor costs are allocated to the manufacturing process as they are incurred.
D) Estimated indirect material costs are allocated to the manufacturing process as production takes place.

Question 20

The Hemingway Company uses a job order costing system. In April, material requisitions of $44,000 were issued (direct materials, $40,000) and materials purchases of both direct and indirect materials totaled $56,600. The ending balance in materials inventory was $18,400. What was the beginning raw materials balance?

A) $5,800
B) $31,000
C) $25,600
D) $22,400

Question 21

Which of the following entries would be made to record the purchase of $20,000 of raw materials on account for Jake's Custom Furniture?

A)
$$\begin{array} { | l | l | l | l | } \hline \text { Accounts payable } & & 20,000 & \\\hline & \text { Work in process inventory } & & 20,000 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } \hline \text { Work in process inventory } & & 20,000 & \\\hline & \text { Accounts payable } & & 20,000 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } \hline \text { Raw materials inventory } & & 20,000 & \\\hline & \text { Accounts payable } & & 20,000 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | l | l | } \hline \text { Accounts payable } & & 20,000 & \\\hline & \text { Materials inventory } & & 20,000 \\\hline\end{array}$$

Question 22

Manufacturing overhead is credited for allocated manufacturing overhead costs throughout the year.

Question 23

The allocation base is a common denominator that links indirect manufacturing overhead costs to the cost objects.

Question 24

The key to accurately assigning indirect manufacturing costs to jobs is to identify a manufacturing overhead allocation base.

Question 25

Which of the following statements regarding overhead allocation is correct?

A) Overhead should be allocated to the manufacturing process when the manufacturing process is complete.
B) Ending work-in process is reduced if overhead is underallocated.
C) Actual overhead is assigned to the manufacturing process as overhead is incurred.
D) Estimated overhead is assigned to the manufacturing process as production takes place.

Question 26

Wall Corporation's selected cost data for July is shown below:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 420,000 \\\hline \text { Work in process inventory, July } 1 & \$ 100,000 \\\hline \text { Work in process inventory, July } 31 & \$ 120,000 \\\hline \text { Direct materials used } & \$ 50,000 \\\hline\end{array}$$ Manufacturing overhead is allocated at 50% of direct labor cost. What are the total manufacturing costs for July?

A) $520,000
B) $400,000
C) $550,000
D) $440,000

Question 27

Wall Corporation's selected cost data for July is shown below:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 420,000 \\\hline \text { Work in process inventory, July } 1 & \$ 100,000 \\\hline \text { Work in process inventory, July } 31 & \$ 120,000 \\\hline \text { Direct materials used } & \$ 50,000 \\\hline\end{array}$$ Manufacturing overhead is allocated at 50% of direct labor cost. What was the amount of direct labor incurred in July?

A) $330,126
B) $260,000
C) $243,750
D) $224,500

Question 28

Potts Company uses a job costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect materials) } & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & \$ 31,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (As a percent of direct labor cost) }\end{array} & 125 \% \\\hline\end{array}$$ The journal entry to record the total materials placed into production would include which of the following?

A) Debit to work in process for $41,000
B) Debit to work in process for $43,000
C) Credit to manufacturing overhead for $2,000
D) Debit to manufacturing overhead for $41,000

Question 29

Potts Company uses a job costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect materials) } & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & \$ 31,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (As a percent of direct labor cost) }\end{array} & 125 \% \\\hline\end{array}$$ The journal entry to record the actual manufacturing overhead costs incurred would include which of the following?

A) Credit to work in process $95,000
B) Credit to manufacturing overhead $93,750
C) Debit to manufacturing overhead $95,000
D) Debit to work in process for $93,750

Question 30

Potts Company uses a job costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect materials) } & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & \$ 31,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (As a percent of direct labor cost) }\end{array} & 125 \% \\\hline\end{array}$$ The journal entry to record the allocation of manufacturing overhead costs incurred would include which of the following?

A) Debit to work in process inventory for $95,000
B) Debit to work in process inventory for $93,750
C) Credit to manufacturing overhead for $95,000
D) Debit to manufacturing overhead for $93,750

Question 31

Potts Company uses a job costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect materials) } & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & \$ 31,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (As a percent of direct labor cost) }\end{array} & 125 \% \\\hline\end{array}$$ What is the balance in work in process inventory at December 31, 2009?

A) $15,000
B) $17,000
C) $16,500
D) $15,500

Question 32

Lakeside Company's schedule of cost of goods manufactured showed the following amounts for April:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 69,300 \\\hline \text { Direct materials used } & \$ 27,000 \\\hline \text { Direct labor (\$15 per hour) } & \$ 30,000 \\\hline \text { Work in process inventory, April 1 } & \$ 9,000 \\\hline\end{array}$$ Manufacturing overhead is allocated at the rate of $4.00 per direct labor hour. What is the work in process inventory on April 30th?

A) $11,700
B) $3,300
C) $4,700
D) $2,700

Question 33

Opague Corporation uses a job order costing system. The work in process inventory balance on December 31, 2009, consists of Job # 120, which has a balance of $19,000. Job # 120 has been charged with manufacturing overhead of $5,100. Opaque allocates manufacturing overhead at a predetermined rate of 85% of direct labor cost. What was the amount of direct materials charged to Job # 120?

A) $7,900
B) $7,000
C) $7,565
D) $5,900

Question 34

Buncombe Company presents the following cost data for 2009:
$$\begin{array} { | l | l | } \hline \text { Estimated manufacturing overhead costs } & \$ 240,000 \\\hline \text { Estimated direct labor cost } & \$ 300,000 \\\hline \text { Estimated direct labor hours } & 30,000 \\\hline \text { Actual direct labor cost } & \$ 315,000 \\\hline \text { Actual direct labor hours } & 33,000 \\\hline \text { Allocation base: Direct labor cost } & \\\hline \text { Other expenses: } & \\\hline \text { Factory depreciation on equipment } & \$ 65,300 \\\hline \text { Factory rent } & \$ 51,000 \\\hline \text { Factory utilities } & \$ 28,900 \\\hline \text { Factory property taxes } & \$ 26,000 \\\hline \text { Indirect labor } & \$ 23,800 \\\hline \text { Indirect materials } & \$ 32,000 \\\hline \text { Sales commissions } & \$ 52,500 \\\hline\end{array}$$ What were the total actual manufacturing overhead costs for Buncombe Company in 2009?

A) $227,000
B) $275,500
C) $223,000
D) $197,000

Question 35

Buncombe Company presents the following cost data for 2009:
$$\begin{array} { | l | l | } \hline \text { Estimated manufacturing overhead costs } & \$ 240,000 \\\hline \text { Estimated direct labor cost } & \$ 300,000 \\\hline \text { Estimated direct labor hours } & 30,000 \\\hline \text { Actual direct labor cost } & \$ 315,000 \\\hline \text { Actual direct labor hours } & 33,000 \\\hline \text { Allocation base: Direct labor cost } & \\\hline \text { Other expenses: } & \\\hline \text { Factory depreciation on equipment } & \$ 65,300 \\\hline \text { Factory rent } & \$ 51,000 \\\hline \text { Factory utilities } & \$ 28,900 \\\hline \text { Factory property taxes } & \$ 26,000 \\\hline \text { Indirect labor } & \$ 23,800 \\\hline \text { Indirect materials } & \$ 32,000 \\\hline \text { Sales commissions } & \$ 52,500 \\\hline\end{array}$$ What is the predetermined manufacturing overhead rate for 2009?

A) 84% of direct labor cost
B) $1.25 per direct labor hour
C) 70% of direct labor cost
D) 80% of direct labor cost

Question 36

Buncombe Company presents the following cost data for 2009:
$$\begin{array} { | l | l | } \hline \text { Estimated manufacturing overhead costs } & \$ 240,000 \\\hline \text { Estimated direct labor cost } & \$ 300,000 \\\hline \text { Estimated direct labor hours } & 30,000 \\\hline \text { Actual direct labor cost } & \$ 315,000 \\\hline \text { Actual direct labor hours } & 33,000 \\\hline \text { Allocation base: Direct labor cost } & \\\hline \text { Other expenses: } & \\\hline \text { Factory depreciation on equipment } & \$ 65,300 \\\hline \text { Factory rent } & \$ 51,000 \\\hline \text { Factory utilities } & \$ 28,900 \\\hline \text { Factory property taxes } & \$ 26,000 \\\hline \text { Indirect labor } & \$ 23,800 \\\hline \text { Indirect materials } & \$ 32,000 \\\hline \text { Sales commissions } & \$ 52,500 \\\hline\end{array}$$ Manufacturing overhead allocated for 2009 is:

A) $450,450
B) $210,000
C) $220,500
D) $252,000

Question 37

Charleston Corporation's schedule of cost of goods manufactured showed the following amounts for August, 2009.
$$\begin{array} { | l | l | } \hline \text { Cost of goods manufactured } & \$ 98,000 \\\hline \text { Direct materials used } & \$ 36,000 \\\hline \text { Direct labor ( } 20 \text { per hour) } & \$ 70,000 \\\hline \text { Work in process, August } 1,2009 & \$ 10,000 \\\hline\end{array}$$ Manufacturing overhead is allocated at the rate of $8 per direct labor hour.
What is the amount of allocated manufacturing overhead for August 2009?

A) $35,000
B) $28,000
C) $34,000
D) $3,500

Question 38

Charleston Corporation's schedule of cost of goods manufactured showed the following amounts for August, 2009.
$$\begin{array} { | l | l | } \hline \text { Cost of goods manufactured } & \$ 98,000 \\\hline \text { Direct materials used } & \$ 36,000 \\\hline \text { Direct labor ( } 20 \text { per hour) } & \$ 70,000 \\\hline \text { Work in process, August } 1,2009 & \$ 10,000 \\\hline\end{array}$$ Manufacturing overhead is allocated at the rate of $8 per direct labor hour. Actual manufacturing overhead for August, 2009 amounts to $30,000. What is the amount of work in process inventory on August 31, 2009?

A) $46,000
B) $6,000
C) $16,000
D) $48,000

Question 39

Clyde Company gathered the following information for the year ended December 31, 2009:
$$\begin{array} { | l | r | } \hline \text { Direct labor cost incurred } & \$ 165,000 \\\hline \text { Estimated manufacturing overhead costs } & \$ 231,000 \\\hline \text { Estimated direct labor cost } & \$ 3,080,000 \\\hline \text { Work in process inventory, Dec, } 31,2009 & \$ 50,000 \\\hline \text { Finished goods inventory, Dec. } 31,2009 & \$ 65,000 \\\hline \text { Cost of goods sold } & \$ 135,000 \\\hline \text { Estimated direct labor hours } & 308,000 \\\hline\end{array}$$ Clyde Company uses a job costing system.
What would the predetermined manufacturing overhead rate be using direct labor cost as the allocation base?

A) 71.4%
B) 140%
C) 5.2%
D) 7.5%

Question 40

Clyde Company gathered the following information for the year ended December 31, 2009:
$$\begin{array} { | l | r | } \hline \text { Direct labor cost incurred } & \$ 165,000 \\\hline \text { Estimated manufacturing overhead costs } & \$ 231,000 \\\hline \text { Estimated direct labor cost } & \$ 3,080,000 \\\hline \text { Work in process inventory, Dec, } 31,2009 & \$ 50,000 \\\hline \text { Finished goods inventory, Dec. } 31,2009 & \$ 65,000 \\\hline \text { Cost of goods sold } & \$ 135,000 \\\hline \text { Estimated direct labor hours } & 308,000 \\\hline\end{array}$$ Clyde Company uses a job costing system.
What would the predetermined manufacturing overhead rate be using direct labor hours as the allocation base?

A) $.75 per hour
B) $1.87 per hour
C) $1.40 per hour
D) $.54 per hour

Question 41

Marion Company uses a job order costing system. The work in process inventory on December 31, 2009, consisted of Job No. 175 with a balance of $53,400. Job No. 175 has been charged with manufacturing overhead of $16,000. Marion allocates manufacturing overhead at a rate of 80% of direct labor cost. What was the amount of direct materials charged to Job No. 175?

A) $20,000
B) $24,600
C) $17,400
D) $7,400

Question 42

Cost of goods sold needs to be increased at year-end when the manufacturing overhead is overapplied.

Question 43

The work in process inventory account summarizes the schedule of cost of goods manufactured.

Question 44

Each time jobs are completed, the entire balance in manufacturing overhead is transferred to finished goods inventory.

Question 45

The work in process account balance increases when cost of goods manufactured is greater than the manufacturing costs incurred during the period.

Question 46

Overallocation of overhead results in which of the following year-end adjustments?

A) A decrease in ending finished goods inventory
B) An increase in ending finished goods inventory
C) A decrease in ending work-in process inventory
D) A decrease in cost of goods sold

Question 47

Underapplied overhead results when:

A) actual overhead costs are greater than applied overhead costs.
B) actual overhead costs are less than estimated overhead costs.
C) actual overhead costs are greater than estimated overhead costs.
D) too much overhead is assigned to cost of goods manufactured.

Question 48

Which of the following statements is incorrect?

A) Finished goods inventory increases when cost of goods manufactured exceeds cost of goods sold.
B) Work in process inventory increases when the manufacturing costs allocated to work in process exceeds cost of goods manufactured.
C) Overapplied overhead results in an adjustment that decreases cost of goods sold.
D) Underapplied overhead results when applied manufacturing overhead is less than estimated manufacturing overhead.

Question 49

McDuffy Furniture Company constructs custom furniture. Job cost records during the second and third quarters of 2009 are shown below.
$$\begin{array} { | l | l | l | l | l | } \hline \text { Job No. } & \text { Date Started } & \text { Date Finished } & \begin{array} { l } \text { Total Cost of Job on } \\\text { July } 1\end{array} & \begin{array} { l } \text { Manufacturing Costs } \\\text { Added in July }\end{array} \\\hline 110 & \text { June 1 } & \text { July 15 } & \$ 32,840 & \$ 43,600 \\\hline 111 & \text { June 3 } & \text { August 25 } & \$ 18,100 & \$ 177,200 \\\hline 112 & \text { July 2 } & \text { July 30 } & - & \$ 145,000 \\\hline 113 & \text { July 6 } & \text { July 31 } & - & \$ 82,800 \\\hline 114 & \text { July 15 } & \text { August 19 } & - & \$ 126,400 \\\hline\end{array}$$ What would the entry be to record the sale of Job 111 on August 25, at a sales price of $305,420?

A)
$$\begin{array} { | l | l | l | l | } \hline \text { Accounts Receivable } & & 305,420 & \\\hline & \text { Sales Revenue } & & 305,420 \\\hline \text { Cost of Goods Sold } & & 195,300 & \\\hline & \text { Work in Process Inventory } & & 195,300 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | l | l | } \hline \text { Accounts Receivable } & & 305,420 & \\\hline & \text { Sales Revenue } & & 305,420 \\\hline \text { Cost of Goods Sold } & & 177,200 & \\\hline & \text { Finished Goods Inventory } & & 177,200 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | l | l | } \hline \text { Accounts Receivable } & & 305,420 & \\\hline & \text { Sales Revenue } & & 305,420 \\\hline \text { Cost of Goods Sold } & & 195,300 & \\\hline & \text { Finished Goods Inventory } & & 195,300 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | l | l | } \hline \text { Accounts Receivable } & & 305,420 & \\\hline & \text { Sales Revenue } & & 305,420 \\\hline \text { Finished Goods Inventory } & & 195,300 & \\\hline & \text { Cost of Goods Sold } & & 195,300 \\\hline\end{array}$$

Question 50

McDuffy Furniture Company constructs custom furniture. Job cost records during the second and third quarters of 2009 are shown below.
$$\begin{array} { | l | l | l | l | l | } \hline \text { Job No. } & \text { Date Started } & \text { Date Finished } & \begin{array} { l } \text { Total Cost of Job on } \\\text { July } 1\end{array} & \begin{array} { l } \text { Manufacturing Costs } \\\text { Added in July }\end{array} \\\hline 110 & \text { June 1 } & \text { July 15 } & \$ 32,840 & \$ 43,600 \\\hline 111 & \text { June 3 } & \text { August 25 } & \$ 18,100 & \$ 177,200 \\\hline 112 & \text { July 2 } & \text { July 30 } & - & \$ 145,000 \\\hline 113 & \text { July 6 } & \text { July 31 } & - & \$ 82,800 \\\hline 114 & \text { July 15 } & \text { August 19 } & - & \$ 126,400 \\\hline\end{array}$$ What is the work in process on July 31st?

A) $321,700
B) $625,940
C) $304,240
D) $0

Question 51

Buncombe Company presents the following cost data for 2009:
$$\begin{array} { | l | l | } \hline \text { Estimated manufacturing overhead costs } & \$ 240,000 \\\hline \text { Estimated direct labor cost } & \$ 300,000 \\\hline \text { Estimated direct labor hours } & 30,000 \\\hline \text { Actual direct labor cost } & \$ 315,000 \\\hline \text { Actual direct labor hours } & 33,000 \\\hline \text { Allocation base: Direct labor cost } & \\\hline \text { Other expenses: } & \\\hline \text { Factory depreciation on equipment } & \$ 65,300 \\\hline \text { Factory rent } & \$ 51,000 \\\hline \text { Factory utilities } & \$ 28,900 \\\hline \text { Factory property taxes } & \$ 26,000 \\\hline \text { Indirect labor } & \$ 23,800 \\\hline \text { Indirect materials } & \$ 32,000 \\\hline \text { Sales commissions } & \$ 52,500 \\\hline\end{array}$$ What is required to close the manufacturing overhead account on December 31, 2009?

A) A credit to manufacturing overhead for $25,000
B) A debit to manufacturing overhead for $25,000
C) A debit to cost of goods sold for $25,000
D) A credit to work in process inventory for $25,000

Question 52

Buncombe Company presents the following cost data for 2009:
$$\begin{array} { | l | l | } \hline \text { Estimated manufacturing overhead costs } & \$ 240,000 \\\hline \text { Estimated direct labor cost } & \$ 300,000 \\\hline \text { Estimated direct labor hours } & 30,000 \\\hline \text { Actual direct labor cost } & \$ 315,000 \\\hline \text { Actual direct labor hours } & 33,000 \\\hline \text { Allocation base: Direct labor cost } & \\\hline \text { Other expenses: } & \\\hline \text { Factory depreciation on equipment } & \$ 65,300 \\\hline \text { Factory rent } & \$ 51,000 \\\hline \text { Factory utilities } & \$ 28,900 \\\hline \text { Factory property taxes } & \$ 26,000 \\\hline \text { Indirect labor } & \$ 23,800 \\\hline \text { Indirect materials } & \$ 32,000 \\\hline \text { Sales commissions } & \$ 52,500 \\\hline\end{array}$$ What is the manufacturing overhead rate?

A) 76% of direct labor cost
B) 125% of direct labor cost
C) 80% of direct labor cost
D) 105% of direct labor cost

Question 53

Daniel Company's manufacturing overhead account showed a $4,500 overallocated balance at the end of 2005. Actual overhead incurred was $95,000. Other accounts showed the following balances:
$$\begin{array} { | l | l | } \hline \text { Materials inventory } & \$ 10,000 \\\hline \text { Work in process inventory } & \$ 30,000 \\\hline \text { Finished goods inventory } & \$ 45,000 \\\hline \text { Cost of goods sold } & \$ 275,000 \\\hline\end{array}$$ The entry to close the manufacturing overhead account would include which of the following?

A) Credit to work in process for $4,500
B) Debit to work in process for $4,500
C) Debit to cost of goods sold for $4,500
D) Debit to manufacturing overhead for $4,500

Question 54

Daniel Company's manufacturing overhead account showed a $4,500 overallocated balance at the end of 2005. Actual overhead incurred was $95,000. Other accounts showed the following balances:
$$\begin{array} { | l | l | } \hline \text { Materials inventory } & \$ 10,000 \\\hline \text { Work in process inventory } & \$ 30,000 \\\hline \text { Finished goods inventory } & \$ 45,000 \\\hline \text { Cost of goods sold } & \$ 275,000 \\\hline\end{array}$$ What will be the ending balance in cost of goods sold after allocating the proper amount of the manufacturing overhead?

A) $270,500
B) $279,500
C) $266,000
D) $284,000

Question 55

Delaware Furniture Company constructs custom furniture. Job cost records during the second and third quarters of 2009 are shown below.
$$\begin{array} { | l | l | l | l | l | } \hline \text { Job No. } & \text { Date Started } & \text { Date Finished } & \begin{array} { l } \text { Total Cost of Job on } \\\text { July } 1\end{array} & \begin{array} { l } \text { Manufacturing Costs } \\\text { Added in July }\end{array} \\\hline 110 & \text { June 1 } & \text { July 15 } & \$ 32,840 & \$ 43,600 \\\hline 111 & \text { June 3 } & \text { August 25 } & \$ 18,100 & \$ 177,200 \\\hline 112 & \text { July 2 } & \text { July 30 } & & \$ 145,000 \\\hline 113 & \text { July 6 } & \text { July 31 } & & \$ 82,800 \\\hline 114 & \text { July 15 } & \text { August 19 } & & \$ 126,400 \\\hline\end{array}$$ What is the total cost of the July 31^st work in process inventory?

A) $466,700
B) $448,600
C) $321,700
D) $303,600

Question 56

Delaware Furniture Company constructs custom furniture. Job cost records during the second and third quarters of 2009 are shown below.
$$\begin{array} { | l | l | l | l | l | } \hline \text { Job No. } & \text { Date Started } & \text { Date Finished } & \begin{array} { l } \text { Total Cost of Job on } \\\text { July } 1\end{array} & \begin{array} { l } \text { Manufacturing Costs } \\\text { Added in July }\end{array} \\\hline 110 & \text { June 1 } & \text { July 15 } & \$ 32,840 & \$ 43,600 \\\hline 111 & \text { June 3 } & \text { August 25 } & \$ 18,100 & \$ 177,200 \\\hline 112 & \text { July 2 } & \text { July 30 } & & \$ 145,000 \\\hline 113 & \text { July 6 } & \text { July 31 } & & \$ 82,800 \\\hline 114 & \text { July 15 } & \text { August 19 } & & \$ 126,400 \\\hline\end{array}$$ What is the total cost of the July 31^st finished goods inventory?

A) $82,800
B) $304,240
C) $209,200
D) $227,800

Question 57

Delaware Furniture Company constructs custom furniture. Job cost records during the second and third quarters of 2009 are shown below.
$$\begin{array} { | l | l | l | l | l | } \hline \text { Job No. } & \text { Date Started } & \text { Date Finished } & \begin{array} { l } \text { Total Cost of Job on } \\\text { July } 1\end{array} & \begin{array} { l } \text { Manufacturing Costs } \\\text { Added in July }\end{array} \\\hline 110 & \text { June 1 } & \text { July 15 } & \$ 32,840 & \$ 43,600 \\\hline 111 & \text { June 3 } & \text { August 25 } & \$ 18,100 & \$ 177,200 \\\hline 112 & \text { July 2 } & \text { July 30 } & & \$ 145,000 \\\hline 113 & \text { July 6 } & \text { July 31 } & & \$ 82,800 \\\hline 114 & \text { July 15 } & \text { August 19 } & & \$ 126,400 \\\hline\end{array}$$ Assuming Jobs No. 110 and 112 are sold to customers in July, what is the total cost of goods sold for July?

A) $188,600
B) $304,240
C) $271,400
D) $221,440

Question 58

Cruise Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Beginning materials inventory } & \$ 36,000 \\\hline \text { Beginning work in process inventory } & \$ 64,000 \\\hline \text { Beginning finished goods inventory } & \$ 54,000 \\\hline \text { Materials purchased on account } & \$ 148,000 \\\hline \text { Direct materials requisitioned } & \$ 85,000 \\\hline \text { Direct labor cost incurred } & \$ 135,000 \\\hline \text { Actual manufacturing overhead incurred } & \$ 162,000 \\\hline \text { Cost of goods completed } & \$ 295,000 \\\hline \text { Cost of goods sold } & \$ 260,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor) }\end{array} & 125 \% \\\hline\end{array}$$ The journal entry to record the cost of goods completed would include which of the following?

A) Debit to finished goods for $295,000
B) Debit to work in process inventory for $260,000
C) Credit to work in process for $260,000
D) Credit to finished goods for $295,000

Question 59

Cruise Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Beginning materials inventory } & \$ 36,000 \\\hline \text { Beginning work in process inventory } & \$ 64,000 \\\hline \text { Beginning finished goods inventory } & \$ 54,000 \\\hline \text { Materials purchased on account } & \$ 148,000 \\\hline \text { Direct materials requisitioned } & \$ 85,000 \\\hline \text { Direct labor cost incurred } & \$ 135,000 \\\hline \text { Actual manufacturing overhead incurred } & \$ 162,000 \\\hline \text { Cost of goods completed } & \$ 295,000 \\\hline \text { Cost of goods sold } & \$ 260,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor) }\end{array} & 125 \% \\\hline\end{array}$$ What is the ending work in process inventory balance?

A) $151,000
B) $87,000
C) $157,750
D) $93,750

Question 60

Cruise Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Beginning materials inventory } & \$ 36,000 \\\hline \text { Beginning work in process inventory } & \$ 64,000 \\\hline \text { Beginning finished goods inventory } & \$ 54,000 \\\hline \text { Materials purchased on account } & \$ 148,000 \\\hline \text { Direct materials requisitioned } & \$ 85,000 \\\hline \text { Direct labor cost incurred } & \$ 135,000 \\\hline \text { Actual manufacturing overhead incurred } & \$ 162,000 \\\hline \text { Cost of goods completed } & \$ 295,000 \\\hline \text { Cost of goods sold } & \$ 260,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor) }\end{array} & 125 \% \\\hline\end{array}$$ What is the ending finished goods inventory balance?

A) $35,000
B) $54,400
C) $19,000
D) $89,000

Question 61

Cruise Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Beginning materials inventory } & \$ 36,000 \\\hline \text { Beginning work in process inventory } & \$ 64,000 \\\hline \text { Beginning finished goods inventory } & \$ 54,000 \\\hline \text { Materials purchased on account } & \$ 148,000 \\\hline \text { Direct materials requisitioned } & \$ 85,000 \\\hline \text { Direct labor cost incurred } & \$ 135,000 \\\hline \text { Actual manufacturing overhead incurred } & \$ 162,000 \\\hline \text { Cost of goods completed } & \$ 295,000 \\\hline \text { Cost of goods sold } & \$ 260,000 \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor) }\end{array} & 125 \% \\\hline\end{array}$$ The journal entry to record the sale of all jobs for the entire year would include which of the following?

A) Debit to cost of goods sold for $295,000
B) Credit to finished goods inventory for $295,000
C) Credit to finished goods inventory for $260,000
D) Debit to finished goods inventory for $295,000

Question 62

Allison Corporation reports end-of-year data as follows for 2009:
$$\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 570,000 \\\hline \text { Actual manufacturing overhead } & \$ 103,600 \\\hline \text { Allocated manufactured overhead } & \$ 96,000 \\\hline \text { Cost of goods sold } & \$ 368,000 \\\hline\end{array}$$ Allison Corporation adjusts cost of goods sold for any balance in the manufacturing overhead account at the end of the year. What is the 2009 gross profit of Allison Corporation?

A) $184,400
B) $194,400
C) $192,000
D) $199,600

Question 63

Davidson Company's manufacturing overhead account showed a $6,200 underallocated balance on December 31, 2009. Other accounts showed the following balances on December 31, 2009:
$$\begin{array} { | l | r | } \hline \text { Materials inventory } & \$ 50,000 \\\hline \text { Work in process inventory } & \$ 30,000 \\\hline \text { Finished goods inventory } & \$ 20,000 \\\hline \text { Cost of goods sold } & \$ 100,000 \\\hline\end{array}$$ Davidson adjusts costs of goods sold for the balance in manufacturing overhead. What is the balance in Cost of goods sold after closing out the balance in manufacturing overhead?

A) $93,800
B) $103,100
C) $106,200
D) $100,000

Question 64

Wake Corporation reports the following balances at December 31, 2009:
$$\begin{array} { | l | l | } \hline \text { Sales revenue } & \$ 360,000 \\\hline \text { Cost of goods sold } & \$ 206,000 \\\hline \text { Allocated manufacturing overhead } & \$ 78,800 \\\hline \text { Actual manufacturing overhead } & \$ 72,800 \\\hline\end{array}$$ Wake adjusts cost of goods sold for any balance in the manufacturing overhead account at the end of the year. What is the gross profit of Wake Corporation for the year ended December 31, 2009?

A) $160,000
B) $172,000
C) $154,000
D) $148,000

Question 65

Clyde Company gathered the following information for the year ended December 31, 2009:
$$\begin{array} { | l | r | } \hline \text { Direct labor cost incurred } & \$ 165,000 \\\hline \text { Estimated manufacturing overhead costs } & \$ 231,000 \\\hline \text { Estimated direct labor cost } & \$ 3,080,000 \\\hline \text { Work in process inventory, Dec, 31, 2009 } & \$ 50,000 \\\hline \text { Finished goods inventory, Dec. 31, 2009 } & \$ 65,000 \\\hline \text { Cost of goods sold } & \$ 135,000 \\\hline \text { Estimated direct labor hours } & 308,000 \\\hline\end{array}$$ Clyde Company uses a job order costing system. Assume that manufacturing overhead is underallocated on December 31, 2009, by $17,000. After closing out manufacturing overhead, what would the balance be in cost of goods sold?

A) $152,000
B) $143,500
C) $160,500
D) $118,000

Question 66

Actual manufacturing overhead for the current period is $19,600 while allocated manufacturing overhead for the current period is $18,700. What is the proper entry to dispose of the manufacturing overhead balance?

A) Debit cost of goods sold and credit manufacturing overhead for $900
B) Debit cost of goods sold and credit finished goods inventory for $900
C) Debit manufacturing overhead and credit cost of goods sold for $900
D) Debit manufacturing overhead and credit work in process inventory for $900

Question 67

When a job is completed in a job order costing system, the journal entry involves which accounts?

A) A debit to finished goods inventory and a credit to work in process inventory for the cost of the job
B) A debit to finished goods inventory and a credit to work in process inventory for the sales price of the job
C) A debit to cost of goods sold and a credit to finished goods inventory for the cost of the job
D) A debit to work in process inventory and a credit to finished goods inventory for the cost of the job

Question 68

Actual manufacturing overhead for 2009 amounts to $102,500, allocated manufacturing overhead for 2009 amounts to $98,700. By how much is manufacturing overhead over/underallocated?

A) $3,800 underallocated
B) $1,900 underallocated
C) $1,900 overallocated
D) $3,800 overallocated

Question 69

Potts Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \begin{array} { l } \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect } \\\text { materials) }\end{array} & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & 125 \% \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor cost) }\end{array} & \\\hline\end{array}$$ The journal entry to transfer completed goods to the finished goods inventory account would include which of the following?

A) Debit to work in process inventory for $226,750
B) Debit to finished goods inventory for $227,875
C) Debit to finished goods inventory for $226,750
D) Credit to work in process inventory for $227,875

Question 70

Potts Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \begin{array} { l } \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect } \\\text { materials) }\end{array} & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & 125 \% \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor cost) }\end{array} & \\\hline\end{array}$$ The journal entry to close manufacturing overhead would include a:

A) debit to manufacturing overhead for $1,250.
B) credit to manufacturing overhead for $1,250.
C) debit to work in process inventory for $1,250.
D) credit to cost of goods sold for $1,250.

Question 71

Potts Company uses a job order costing system and had the following data available for 2009.
$$\begin{array} { | l | r | } \hline \text { Materials purchased on account } & \$ 75,000 \\\hline \begin{array} { l } \text { Materials requisitioned (includes } \$ 2,000 \text { of indirect } \\\text { materials) }\end{array} & \$ 43,000 \\\hline \text { Direct labor incurred } & \$ 75,000 \\\hline \text { Manufacturing overhead incurred } & \$ 95,000 \\\hline \text { Cost of goods completed } & \$ 226,750 \\\hline \text { Cost of goods sold } & \$ 138,000 \\\hline \text { Beginning materials inventory } & \$ 15,000 \\\hline \text { Beginning work in process inventory } & \$ 32,000 \\\hline \text { Beginning finished goods inventory } & 125 \% \\\hline \begin{array} { l } \text { Predetermined manufacturing overhead rate } \\\text { (as a percent of direct labor cost) }\end{array} & \\\hline\end{array}$$ The journal entry to close manufacturing overhead would include which of the following?

A) Debit to cost of goods sold for $1,250
B) Debit to work in process inventory for $1,250
C) Debit to manufacturing overhead for $1,250
D) Credit to work in process inventory for $1,250

Question 72

Door Company estimated manufacturing overhead costs for 2009 at $378,000. The predetermined manufacturing overhead rate was based on 105,000 estimated direct labor hours. Actual direct labor
Hours for 2009 totaled 110,000. The manufacturing overhead account showed debit entries
Totaling $394,000. For the year, was overhead overallocated or underallocated and by how much?

A) $16,000 underallocated
B) $2,000 overallocated
C) $2,000 underallocated
D) $16,000 overallocated

Question 73

Manufacturing overhead is overallocated $1,000 at the end of the current period. The journal entry to dispose of the overallocated overhead balance involves a debit to:

A) manufacturing overhead and a credit to cost of goods sold for $1,000.
B) cost of goods sold and a credit to manufacturing overhead for $1,000.
C) manufacturing overhead and a credit to work in process inventory for $1,000.
D) cost of goods sold and a credit to finished goods inventory for $1,000.

Question 74

A service firm would most likely use a process costing system.

Question 75

Both service firms and manufacturing companies allocate indirect costs.

Question 76

Service firms follow the same approach as manufacturing companies to develop a predetermined indirect cost allocation rate.

Question 77

The main cost driver for service firms is usually machine hours.

Question 78

Which of the following is the most significant cost for a service company which used job order costing?

A) Labor costs
B) Indirect costs
C) Supplies costs
D) Overhead costs