Deck 3: Job Costing

Question 1

Answer the following questions using the information below:
Fouad and Janaan Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2014:


-What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional labor-hour?

A) $32.40; $5.00
B) $29.80; $5.40
C) $27.00; $5.00
D) $27.00; $4.17

Answer 1

$27.00; $5.00

Question 2

Answer the following questions using the information below:
Husayn Pet Supplies applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor-hours at $20 per hour; and a 20% markup rate on total manufacturing costs.

-Manufacturing overhead cost estimates for this special order total:

A) $30,000
B) $36,000
C) $10,000
D) None of these answers is correct.

Answer 2

$30,000

Question 3

Answer the following questions using the information below:
Giza Cotton Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for a job making jackets for Giza Central High School band.


-For Giza Cotton Manufacturing, what is the annual manufacturing overhead cost-allocation rate?

A) $0.80
B) $0.30
C) $0.50
D) $33.33

Answer 3

$0.30

Question 4

Answer the following questions using the information below:
Giza Cotton Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for a job making jackets for Giza Central High School band.


-What are the total manufacturing costs of this job?

A) $1,920
B) $1,650
C) $1,200
D) $1,470

Question 5

Answer the following questions using the information below:
Al Masoud Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2013:


-What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour?

A) $32.40; $5.00
B) $27.00; $5.00
C) $29.80; $5.40
D) $27.00; $4.17

Question 6

Jamaal Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2015, the following estimates were provided for the coming year:
Required:
a. Compute the manufacturing overhead allocation rate for each department.
b. Compute the total cost of Job 846.
c. Provide possible reasons why Jamaal Manufacturing uses two different cost allocation rates.

Question 7

What is the appropriate journal entry if $100,000 of materials were purchased on account for the month of August?

A)
B)
C)
D)

Question 8

What is the appropriate journal entry if direct materials of $20,000 and indirect materials of $3,000 are sent to the manufacturing plant floor?

A)
B)
C)
D)

Question 9

What would be the appropriate journal entry if the following labor wages were incurred in a furniture manufacturing company?
Assembly workers $20,000
Janitors $10,000

A)
B)
C)
D)

Question 10

Manufacturing overhead costs incurred for the month are:
Utilities $30,000
Depreciation on equipment $25,000
Repairs $20,000
Which is the correct journal entry assuming utilities and repairs were on account?

A)
B)
C)
D)

Question 11

Answer the following questions using the information below:

Husayn Pet Supplies applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor-hours at $20 per hour; and a 20% markup rate on total manufacturing costs.


-The bid price for this special order is:

A) $96,000
B) $60,000
C) $80,000
D) $50,000

Question 12

Answer the following questions using the information below:
Wayland Manufacturing uses a normal cost system and had the following data available for 2014:


-The ending balance of direct materials inventory is:

A) $174,000
B) $82,000
C) $92,000
D) $108,000

Question 13

Answer the following questions using the information below:
Wayland Manufacturing uses a normal cost system and had the following data available for 2014:


-The ending balance of finished goods inventory is:

A) $292,000
B) $58,000
C) $94,000
D) $36,000

Question 14

What is the journal entry used to write off the difference between allocated and actual overhead directly to cost of goods sold?

A)
B)
C)
D)

Question 15

What is the journal entry used to write off the difference between allocated and actual overhead using the proration approach?

A)
B)
C)
D)

Question 16

Beirut Plastic Products Company manufactures pipes and applies manufacturing costs to production at a budgeted indirect-cost rate of $9 per direct labor-hour. The following data are obtained from the accounting records for June 2014:

Required:
a. What actual amount of manufacturing overhead costs was incurred during June 2014?
b. What amount of manufacturing overhead was allocated to all jobs during June 2014?
c. For June 2014, was manufacturing overhead underallocated or overallocated? Explain.

Question 17

Khalil employs 25 professional cleaners. Budgeted costs total $1,800,000 of which $1,050,000 is direct costs. Budgeted indirect costs are $750,000 and actual indirect costs were $793,800. Budgeted professional labor-hours are 1,000,000 and actual hours were 1,008,000. What is the budgeted direct cost-allocation rate?

A) $1.80 per hour
B) $1.05 per hour
C) $0.75 per hour
D) $1.7857 per hour

Question 18

Answer the following questions using the information below:

A local accounting firm employs 20 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 500 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis.

Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year.


-What is the budgeted direct labor cost rate per hour?

A) $4.05 per hour
B) $2,000 per hour
C) $18.00 per hour
D) $17.50 per hour

Question 19

Modern Electronics manufactures surround sound systems and applies manufacturing costs to production at a budgeted indirect-cost rate of $22 per direct-labor hour. The following data are obtained from the accounting records for August 2014:

Required:
a. What actual amount of manufacturing overhead cost was incurred during August 2014?
b. What amount of manufacturing overhead was allocated to all jobs during August 2014?
c. For August 2014, was manufacturing overhead underallocated or overallocated? Explain.