Deck 7: Job Costing

Question 1

Job cost sheets are used in accounting systems as a subsidiary ledger for the Work-in-Process account.

Answer 1

True

Question 2

Actual costing does not use a predetermined overhead rate to apply manufacturing overhead costs to jobs completed during the period.

Answer 2

True

Question 3

Accounting for direct materials and direct labor is easier than accounting for manufacturing overhead costs.

Answer 3

True

Question 4

The cost in the ending Finished Goods inventory account consists of the direct materials,direct labor,and manufacturing overhead of all jobs still in process at the end of the period.

Question 5

Indirect material and indirect labor are two examples of manufacturing overhead costs

Question 6

The journal entry to record actual manufacturing overhead for indirect material debits Manufacturing Overhead (Control)and credits Accounts Payable.

Question 7

Most major projects require budget and completion stage revisions at certain intervals due to their inherent uncertainty.

Question 8

Service organizations generally use the same job costing procedures as manufacturers.

Question 9

A job is a product or service that can be easily and conveniently distinguished from other products/services.

Question 10

It is unethical to intentionally charge costs to the wrong job.

Question 11

Service organizations,by their nature,cannot have a balance in Work-in-Process Inventory.

Question 12

The journal entry to record actual manufacturing overhead for indirect labor debits Manufacturing Overhead (Control)and credits Work-in-Process inventory.

Question 13

At the end of the accounting period,manufacturing overhead costs are applied to uncompleted jobs using the same predetermined overhead rate that is used to apply manufacturing overhead costs to completed jobs.

Question 14

Normal costing uses the actual allocation base activity to apply manufacturing overhead costs to jobs during the period.

Question 15

The periodic allocation of manufacturing overhead costs to job cost sheets is based on an event,not a transaction.

Question 16

Overapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

Question 17

The journal entry to apply manufacturing overhead costs to completed jobs credits either Applied Manufacturing Overhead or Manufacturing Overhead (Control).

Question 18

Underapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

Question 19

The predetermined overhead rate is computed by dividing the estimated activity of the allocation base into the estimated manufacturing overhead costs.

Question 20

Job shops have three types of inventory accounts: Direct Materials,Work-in-Process,and Finished Goods.

Question 21

Which of the following isnot a characteristic of job costing?

A) Each job is distinguishable from other jobs.
B) Identical units are produced on an ongoing basis.
C) Job cost data are used for setting prices and bids.
D) It is possible to compare actual costs with estimated costs.

Question 22

Which of the following documents is used as the basis for posting to the direct labor section of the job cost sheet?

A) Purchase requisition.
B) Purchase order.
C) Receiving report.
D) Time carD.
The time card has to do with labor being incurreD.

Question 23

The financial records for the Harrison Manufacturing Company have been destroyed in a fire.The following information has been obtained from a separate set of books maintained by the cost accountant.The cost accountant now asks for your assistance in computing the missing amounts.What is the amount of the materials purchased?

A) $14,400.
B) $16,400.
C) $18,000.
D) $19,600.

Question 24

The financial records for the Harrison Manufacturing Company have been destroyed in a fire.The following information has been obtained from a separate set of books maintained by the cost accountant.The cost accountant now asks for your assistance in computing the missing amounts.What is the value of the beginning Finished Goods Inventory?

A) $0.
B) $4,200.
C) $13,300.
D) $21,700.

Question 25

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the value of the ending Work-in-Process Inventory?

A) $13,261.50.
B) $14,259.00.
C) $88,410.00.
D) $95,060.50.

Question 26

The general journal entry to record the issuance of the materials represented by the following materials requisitions for the month includes: $$\begin{array} { | c | c | r | } \hline \text { Requisition No. } & \text { Description } & \text { Amount } \\\hline 372 & \text { Job No. } 179 & \$ 5,250 \\\hline 373 & \text { Job No. } 184 & \$ 3,700 \\\hline 374 & \text { Job No. } 180 & \$ 4,525 \\\hline 375 & \text { General factory use } & \$ 725 \\\hline 376 & \text { Job No. } 182 & \$ 2,470 \\\hline\end{array}$$

A) a debit to Materials Inventory,$15,945.
B) a debit to Materials Inventory,$16,670.
C) a debit to Work-in-Process Inventory,$15,945.
D) a credit to Work-in-Process Inventory,$15,945.

Question 27

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the value of the ending Finished Goods Inventory?

A) $13,261.50.
B) $24,628.50.
C) $26,481.00.
D) $164,190.00.

Question 28

Which of the following statements is(are)true regarding product costing? (A)A job is a cost object that can be easily and conveniently distinguished from other cost objects.(B)Job cost sheets are used in accounting systems as a subsidiary ledger for the Work-in-Process account.

A) Only A is true.
B) Only B is true.
C) Both A and B are true.
D) Neither A nor B is true.

Question 29

Stock Co.uses a job order costing system.The following debits (credits)appeared in Stock's work-in-process account for the month of April: Stock applies overhead to production at a predetermined rate of 80% of direct labor cost.Job No.5,the only job still in process on April 30 has been charged with direct labor of $2,000.What was the amount of direct material charged to Job No.5? (CPA adapted)
$$\begin{array} { | r | l | r | } \hline \text { April } & \text { Description } & \text { Amount } \\\hline 1 & \text { Balance } & \$ 4,000 \\\hline 30 & \text { Direct materials } & 24,000 \\\hline 30 & \text { Direct labor } & 16,000 \\\hline 30 & \text { Factory overhead } & 12,800 \\\hline 30 & \text { To finished goods } & ( 48,000 ) \\\hline\end{array}$$

A) $3,000.
B) $5,200.
C) $8,800.
D) $24,000.

Question 30

Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period?

A) Applied Manufacturing Overhead.
B) Work-in-Process Inventory.
C) Manufacturing Overhead Control.
D) Cost of Goods SolD.
Actual overhead incurred is entered into the Manufacturing Overhead Control account.

Question 31

The following are Margin Co.'s production costs for December: What amount of costs should be traced to specific products in the production process? (CPA adapted)
$$\begin{array} { | l | r | } \hline \text { Direct Material } & \$ 100,000 \\\hline \text { Direct Labor } & 90,000 \\\hline \text { Factory Overhead } & 4,000 \\\hline\end{array}$$

A) $194,000.
B) $190,000.
C) $100,000.
D) $90,000.

Question 32

Which of the following companies would most likely use job costing?

A) Paper manufacturer.
B) Paint producer.
C) Breakfast cereal maker.
D) Advertising agency.

Question 33

Under Eagle Co.'s job order costing system,manufacturing overhead is applied to Work-in-Process using a predetermined annual overhead rate.During February,Eagle's transactions included the following: Eagle had neither beginning nor ending inventory in Work-in-Process Inventory.What was the cost of jobs completed in February? (CPA adapted)
$$\begin{array} { | l | r | } \hline \text { Direct materials issued to production } & \$ 90,000 \\\hline \text { Indirect materials issued to production } & 8,000 \\\hline \text { Manufacturing overhead incurred } & 125,000 \\\hline \text { Manufacturing overhead applied } & 113,000 \\\hline \text { Direct labor costs } & 107,000 \\\hline\end{array}$$

A) $302,000.
B) $310,000.
C) $322,000.
D) $330,000.

Question 34

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.What is the amount of direct materials purchased during June?
$$\begin{array} { | l | r | } \hline \text { Direct Materials Inventory } & \$ 12,000 \\\hline \text { Work-ir-Process Inventory } & 4,500 \\\hline \text { Finished Goods Inventory } & 11,000 \\\hline \text { Manufacturing Overhead Control } & 16,500 \\\hline \text { Accounts Payable } & 6,000 \\\hline\end{array}$$

A) $38,000.
B) $40,000.
C) $42,000.
D) $43,000.

Question 35

Which of the following documents is used as the basis for posting to the direct materials section of the job cost sheet?

A) Purchase requisition.
B) Materials requisition.
C) Receiving report.
D) Purchase order.

Question 36

Compute the Work-in-Process transferred to the finished goods warehouse on April 30 using the following information: $$\begin{array} { | l | r | } \hline \text { Work-In-Process Inventory, April } 30 & \$ 175 \\\hline \text { Direct material purchased during April } & 150 \\\hline \text { Work-In-Process Inventory, April } 1 & 200 \\\hline \text { Direct labor costs incurred } & 300 \\\hline \text { Manufacturing overhead costs } & 250 \\\hline \text { Direct materials used in production } & 125 \\\hline\end{array}$$

A) $650.
B) $675.
C) $700.
D) $750.

Question 37

The following events took place at a manufacturing company for the current year: (1)Purchased $95,000 in direct materials.(2)Incurred labor costs as follows: (a)direct,$56,000 and (b)indirect,$13,600.(3)Other manufacturing overhead was $107,000,excluding indirect labor.(4)Transferred 80% of the materials to the manufacturing assembly line.(5)Completed 65% of the Work-in-Process during the year.(6)Sold 85% of the completed goods.(7)There were no beginning inventories.What is the company's Cost of Goods Sold?

A) $164,190.00.
B) $139,561.50.
C) $252,600.00.
D) $214,710.50.

Question 38

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.What is the ending balance in the Work-in-Process Inventory on June 30?
$$\begin{array} { | l | r | } \hline \text { Direct Materials Inventory } & \$ 12,000 \\\hline \text { Work-ir-Process Inventory } & 4,500 \\\hline \text { Finished Goods Inventory } & 11,000 \\\hline \text { Manufacturing Overhead Control } & 16,500 \\\hline \text { Accounts Payable } & 6,000 \\\hline\end{array}$$

A) $4,800.
B) $5,300.
C) $9,300.
D) $9,800.

Question 39

For which of the following businesses would a job order cost system be appropriate?

A) Auto repair shop.
B) Crude oil refinery.
C) Drug manufacturer.
D) Root beer producer.

Question 40

The financial records for the Harrison Manufacturing Company have been destroyed in a fire.The following information has been obtained from a separate set of books maintained by the cost accountant.The cost accountant now asks for your assistance in computing the missing amounts.What is the value of the ending Work-in-Process inventory balance?

A) $0.
B) $4,200.
C) $7,500.
D) $8,000.

Question 41

The following selected data were taken from the books of the Owens O-Rings Company.The company uses job costing to account for manufacturing costs.The data relate to April operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows:
C. Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.If Job 406 was sold on account for $41,500,how much gross profit would be recognized for the job?
$$\begin{array} { | l | r | l | } \hline \text { Job 405 } & \$ 11,000 & 3,000 \text { hours } \\\hline \text { Job 406 } & \$ 14,000 & 3,600 \text { hours } \\\hline \text { Job 407 } & \$ 8,000 & 1,900 \text { hours } \\\hline \text { Indirect labor } & \$ 3,700 & \\\hline\end{array}$$

A) $3,800.
B) $5,900.
C) $18,500.
D) $35,600.

Question 42

Which of the following statements is(are)true regarding the application of manufacturing overhead? (A)Manufacturing overhead is only recorded on the job cost sheets when (a)financial statements are prepared or a job is completed.(B)Overapplied overhead occurs when the actual overhead costs incurred during a period are greater than the overhead costs applied during the period.

A) Only A is true.
B) Only B is true.
C) Both A and B are true.
D) Neither A nor B is true.

Question 43

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.In a job-order costing system,direct labor cost is ordinarily debited to:
$$\begin{array} { | l | r | } \hline \text { Direct Materials Inventory } & \$ 12,000 \\\hline \text { Work-ir-Process Inventory } & 4,500 \\\hline \text { Finished Goods Inventory } & 11,000 \\\hline \text { Manufacturing Overhead Control } & 16,500 \\\hline \text { Accounts Payable } & 6,000 \\\hline\end{array}$$

A) Manufacturing Overhead.
B) Cost of Goods Sold.
C) Finished Goods.
D) Work-in-Process.

Question 44

Grayson Inc.has provided the following data for the month of October.The balance in the Finished Goods inventory account at the beginning of the month was $49,000 and at the end of the month was $45,000.The cost of goods manufactured for the month was $226,000.The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work-in-Process was $70,000.The adjusted cost of goods sold that would appear on the income statement for October is:

A) $226,000.
B) $230,000.
C) $222,000.
D) $234,000.

Question 45

Fogel Flight Company uses a job-order costing system.The direct materials for Job #045391 were purchased in September and put into production in October.The job was not completed by the end of October.At the end of October,in what account would the direct material cost assigned to Job #045391 be located?

A) Raw materials inventory.
B) Work-in-Process inventory.
C) Finished goods inventory.
D) Cost of goods manufactureD.
The uncompleted job would be located in Work-in-Process.

Question 46

Carson Inc.has provided the following data for the month of May.There were no beginning inventories;consequently,the direct materials,direct labor,and manufacturing overhead applied listed below are all for the current month.Manufacturing overhead for the month was underapplied by $10,000.The company allocates any underapplied or overapplied overhead among Work-in-Process,finished goods,and cost of goods sold at the end of the month on the basis of the overhead applied during the month in those accounts.The journal entry to record the allocation of any underapplied or overapplied overhead for May would include the following: $$\begin{array} { | l | r | r | r | r | } \hline & \begin{array} { r } \text { Work-in } \\\text { Process }\end{array} & \begin{array} { r } \text { Finished } \\\text { Goods }\end{array} & \begin{array} { r } \text { Cost of } \\\text { Goods } \\\text { Sold }\end{array} & \text { Total } \\\hline \text { Direct materials } & \$ 5,010 & \$ 11,500 & \$ 111,320 & \$ 127,830 \\\hline \text { Direct labor } & 2,430 & 10,500 & 101,640 & 114,570 \\\hline \begin{array} { l } \text { Manutacturing } \\\text { overhead } \\\text { applied }\end{array} & 3,200 & 7,200 & 69,600 & 80,000 \\\hline \text { Total } & \$ 10,640 & \$ 29,200 & \$ 282,660 & \$ 322,400 \\\hline\end{array}$$

A) credit to Finished Goods of $900.
B) debit to Finished Goods of $29,200.
C) credit to Finished Goods of $29,200.
D) debit to Finished Goods of $900.

Question 47

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.What document is used to determine the actual amount of direct labor to record on a job cost sheet?
$$\begin{array} { | l | r | } \hline \text { Direct Materials Inventory } & \$ 12,000 \\\hline \text { Work-ir-Process Inventory } & 4,500 \\\hline \text { Finished Goods Inventory } & 11,000 \\\hline \text { Manufacturing Overhead Control } & 16,500 \\\hline \text { Accounts Payable } & 6,000 \\\hline\end{array}$$

A) Time ticket.
B) Payroll register.
C) Production order.
D) Wages payable account.

Question 48

The following selected data were taken from the books of the Owens O-Rings Company.The company uses job costing to account for manufacturing costs.The data relate to April operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows:
C. Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.The balance in the factory overhead account would represent the fact that overhead was:
$$\begin{array} { | l | r | l | } \hline \text { Job 405 } & \$ 11,000 & 3,000 \text { hours } \\\hline \text { Job 406 } & \$ 14,000 & 3,600 \text { hours } \\\hline \text { Job 407 } & \$ 8,000 & 1,900 \text { hours } \\\hline \text { Indirect labor } & \$ 3,700 & \\\hline\end{array}$$

A) $1,050 underapplied .
B) $3,150 underapplied .
C) $1,250 overapplied .
D) $4,350 overapplied .

Manufacturing Overhead Control = $2,300 + 3,700 + 19,400 + 5,400 = $30,800 - Applied Manufacturing Overhead $29,750 = $1,050 Underapplied

Question 49

Which of the following accounts is debited when direct labor is recorded?

A) Work-in-Process.
B) Salaries and wages expense.
C) Salaries and wages payable.
D) Manufacturing overheaD.
The Work-in-Process account is debited when direct labor is recordeD.

Question 50

The Falcon Company does not maintain backup documents for its computer files.In June,some of the current data were lost,and you have been asked to help reconstruct the data.The following beginning balances on June 1 are known: Reviewing old documents and interviewing selected employees have generated the following additional information:
The production superintendent's job cost sheets indicated that materials of $2,600 were included in the June 30 Work-in-Process Inventory.Also,300 direct labor-hours had been paid at $6.00 per hour for the jobs in process on June 30.The Accounts Payable account is only for direct material purchases.The clerk remembers clearly that the balance in the Accounts Payable on June 30 was $8,000.An analysis of canceled checks indicated payments of $40,000 were made to suppliers during June.Payroll records indicate that 5,200 direct labor-hours were recorded for June.It was verified that there were no variations in pay rates among employees during June.Records at the warehouse indicate that the Finished Goods Inventory totaled $16,000 on June 30.Another record kept manually indicates that the Cost of Goods Sold in June totaled $84,000.The predetermined overhead rate was based on an estimated 60,000 direct labor-hours for the year and an estimated $180,000 in manufacturing overhead costs.What is the Cost of Goods Manufactured for June?
$$\begin{array} { | l | r | } \hline \text { Direct Materials Inventory } & \$ 12,000 \\\hline \text { Work-ir-Process Inventory } & 4,500 \\\hline \text { Finished Goods Inventory } & 11,000 \\\hline \text { Manufacturing Overhead Control } & 16,500 \\\hline \text { Accounts Payable } & 6,000 \\\hline\end{array}$$

A) $89,000.
B) $84,000.
C) $94,000.
D) $99,000.

Question 51

What are the transfers-out from the Finished Goods Inventory called?

A) Cost of Goods Manufactured.
B) Cost of Goods Available.
C) Cost of Goods Completed.
D) Cost of Goods SolD.
When transfers occur from Finished Goods Inventory they go to Cost of Goods SolD.

Question 52

The following selected data were taken from the books of the Owens O-Rings Company.The company uses job costing to account for manufacturing costs.The data relate to April operations.A)Materials and supplies were requisitioned from the stores clerk as follows: Job 405,material X,$7,000.Job 406,material X,$3,000;material Y,$6,000.Job 407,material X,$7,000;material Y,$3,200.For general factory use: materials A,B,and C,$2,300.B)Time tickets for the month were chargeable as follows:
C. Other information:
Factory paychecks for $36,700 were issued during the month.Various factory overhead charges of $19,400 were incurred on account.Depreciation of factory equipment for the month was $5,400.Factory overhead was applied to jobs at the rate of $3.50 per direct labor hour.Job orders completed during the month: Job 405 and Job 406.Selling and administrative costs were $2,100.Factory overhead is closed out only at the end of the year.The end of the month Work-in-Process Inventory balance would be:
$$\begin{array} { | l | r | l | } \hline \text { Job 405 } & \$ 11,000 & 3,000 \text { hours } \\\hline \text { Job 406 } & \$ 14,000 & 3,600 \text { hours } \\\hline \text { Job 407 } & \$ 8,000 & 1,900 \text { hours } \\\hline \text { Indirect labor } & \$ 3,700 & \\\hline\end{array}$$

A) $18,200.
B) $24,850.
C) $64,100.
D) $88,950.

Question 53

Demur Inc. ,a manufacturing company,has provided the following data for the month of April.The balance in the Work-in-Process inventory account was $10,000 at the beginning of the month and $22,000 at the end of the month.During the month,the company incurred direct materials cost of $63,000 and direct labor cost of $39,000.The actual manufacturing overhead cost incurred was $40,000.The manufacturing overhead cost applied to Work-in-Process was $43,000.The cost of goods manufactured for April was:

A) $133,000.
B) $142,000.
C) $145,000.
D) $130,000.

Question 54

In a job costing system,the dollar amount in the journal entry that transfers the costs of jobs from Work-in-Process Inventory to Finished Goods Inventory is the sum of the costs charged to all jobs:

A) sold during the period.
B) completed during the period.
C) in process during the period.
D) started in process during the perioD.
Finished Goods Inventory is charged and Work-in-Process Inventory is relieved for all jobs completed during the perioD.

Question 55

Delgato Corporation,a manufacturing company,has provided data concerning its operations for September.The beginning balance in the raw materials account was $37,000 and the ending balance was $29,000.Raw materials purchases during the month totaled $57,000.Manufacturing overhead cost incurred during the month was $102,000,of which $2,000 consisted of raw materials classified as indirect materials.The direct materials cost for November was:

A) $63,000.
B) $57,000.
C) $65,000.
D) $49,000.

Question 56

The balance in the Work-in-Process account equals:

A) the balance in the Finished Goods inventory account.
B) the balance in the Cost of Goods Sold account.
C) the balances on the job cost sheets of uncompleted jobs.
D) the balance in the Manufacturing Overhead account.

Question 57

Which of the following events or transactions will not result in manufacturing overhead being applied to production?

A) Completion of a job in the current period that was started in a prior period.
B) Completion of a job in the current period that was started in the current period.
C) Preparing financial statements when work is in process at the end of the period.
D) Preparing financial statements when there is no Work-in-Process at the end of the perioD.
The absence of Work-in-Process at the end of the period results in no overhead being applieD.

Question 58

Under Lamar Company's job-order costing system,manufacturing overhead is applied to Work-in-Process inventory using a predetermined overhead rate.During June,Lamar's transactions included the following: Lamar Company had no beginning or ending inventories.What was the cost of goods manufactured for June? (CMA adapted)
$$\begin{array} { | l | r | } \hline \text { Direct materials issued to production } & \$ 90,000 \\\hline \text { Indirect materials issued to production } & \$ 8,000 \\\hline \text { Manufacturing overhead cost incurred } & \$ 125,000 \\\hline \text { Manufacturing overhead cost applied } & \$ 113,000 \\\hline \text { Direct labor cost incurred } & \$ 107,000 \\\hline\end{array}$$

A) $302,000.
B) $310,000.
C) $322,000.
D) $330,000.

Question 59

Underapplied overhead occurs when the balance in the Manufacturing Overhead Control account is:

A) greater than the balance in the Applied Manufacturing Overhead account.
B) equal to the balance in the Applied Manufacturing Overhead account.
C) less than the balance in the Applied Manufacturing Overhead account.
D) less than the balance in the Finished Goods Inventory account.

Question 60

It is possible that the total cost of a job started in April and completed in May will not include:

A) direct material added in April.
B) direct labor added in May.
C) applied overhead in April.
D) direct material purchased in May.

Question 61

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the over- or underapplied overhead?

A) $21,520 underapplied.
B) $13,600 underapplied.
C) $7,920 overapplied.
D) $0.

Question 62

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much overhead would be applied to production?

A) $266,400.
B) $274,320.
C) $279,607.
D) $287,920.

Question 63

Reyes Corporation applies overhead using an actual costing approach.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the over- or underapplied overhead?

A) $21,520 underapplied.
B) $13,600 underapplied.
C) $7,920 overapplied.
D) $0.

Question 64

The predetermined overhead rate for manufacturing overhead for 2016 is $4.00 per direct labor hour.Employees are expected to earn $5.00 per hour and the company is planning on paying its employees $100,000 during the year.However,only 75% of the employees are classified as "direct labor." What was the estimated manufacturing overhead for 2016?

A) $60,000.
B) $75,000.
C) $80,000.
D) $93,750.

Question 65

Which of the following approaches allocates overhead by multiplying an actual overhead rate × actual activity?

A) Actual costing.
B) Normal costing.
C) Regression costing.
D) Standard costing.

Question 66

Which terms will make the following statement true? When manufacturing overhead is overapplied,the Manufacturing Overhead account has a __________ balance and applied manufacturing overhead is greater than __________ manufacturing overhead.

A) debit,actual
B) credit,actual
C) debit,estimated
D) credit,estimated

Question 67

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $232,750,budgeted machine-hours were 17,500.Actual factory overhead was $227,830,actual machine-hours were 16,150.How much is the over- or underapplied overhead?

A) $13,035 overapplied.
B) $13,035 underapplied.
C) $4,920 overapplied.
D) $4,920 underapplieD.
$227,830 - [($232,750/17,500)× 16,150] = 13,035 underapplied

Question 68

Which of the following approaches allocates overhead by multiplying a predetermined rate × standard activity?

A) Actual costing.
B) Normal costing.
C) Regression costing.
D) Standard costing.

Question 69

Reyes Corporation applies overhead using an actual costing approach.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much overhead would be applied to production?

A) $266,400.
B) $274,320.
C) $279,607.
D) $287,920.

Question 70

Manufacturing overhead applied on the basis of direct labor-hours was $120,000,while actual manufacturing overhead incurred was $124,000 for the month of April.Which of the following is always true given the statement above?

A) Overhead was overapplied by $4,000.
B) Overhead was underapplied by $4,000.
C) Actual direct labor-hours exceeded budgeted direct labor-hours.
D) Actual direct labor-hours were less than budgeted direct labor-hours.

Question 71

Reyes Corporation applies overhead using a normal costing approach based upon machine-hours.Budgeted factory overhead was $232,750,budgeted machine-hours were 17,500.Actual factory overhead was $227,830,actual machine-hours were 16,150.How much overhead would be applied to production?

A) $214,795.
B) $227,830.
C) $232,750.
D) $246,875.

Question 72

Which of the following actions do notcause an impropriety in job costing?

A) Misstating the stage of completion.
B) Choosing to use normal costing rather than actual costing.
C) Charging costs to the wrong job.
D) Choosing an allocation method based on the results rather than choosing the method based on resource usage.

Question 73

If a company multiplies its actual overhead rate by the actual activity level of its allocation base,it is using:

A) standard costing.
B) normal costing.
C) actual costing.
D) budget costing.

Question 74

In a traditional job order costing system,the issue of indirect materials to a production department increases: (CPA adapted)

A) stores control.
B) work-in-Process control.
C) factory overhead control.
D) factory overhead applieD.
Indirect material is overhead-it increases Manufacturing Overhead Control.

Question 75

Which of the following approaches allocates overhead by multiplying a predetermined overhead rate × actual activity?

A) Actual costing.
B) Normal costing.
C) Regression costing.
D) Standard costing.

Question 76

If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base,it is using:

A) standard costing.
B) normal costing.
C) actual costing.
D) budget costing.

Question 77

The actual manufacturing overhead incurred at Liberty Industries during May was $59,000,while the manufacturing overhead applied to Work-in-Process was $74,000.The company's Cost of Goods Sold was $289,000 prior to closing out its Manufacturing Overhead account.The company closes out its Manufacturing Overhead account to Cost of Goods Sold.Which of the following statements is true?

A) Manufacturing overhead was overapplied by $15,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $274,000.
B) Manufacturing overhead was underapplied by $15,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $274,000.
C) Manufacturing overhead was overapplied by $15,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $304,000.
D) Manufacturing overhead was underapplied by $15,000;Cost of Goods Sold after closing out the Manufacturing Overhead account is $304,000.

Question 78

Before prorating the manufacturing overhead costs at the end of 2016,the Cost of Goods Sold and Finished Goods Inventory had applied overhead costs of $57,500 and $20,000 in them,respectively.There was no Work-in-Process at the beginning or end of 2016.During the year,manufacturing overhead costs of $74,000 were actually incurred.The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2016.If the under or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts,how much will be allocated to the Finished Goods Inventory?

A) $903.
B) $1,217.
C) $1,283.
D) $2,597.

Question 79

Before prorating the manufacturing overhead costs at the end of 2016,the Cost of Goods Sold and Finished Goods Inventory had applied overhead costs of $57,500 and $20,000 in them,respectively.There was no Work-in-Process at the beginning or end of 2016.During the year,manufacturing overhead costs of $74,000 were actually incurred.The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2016.If the under- or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts,how much will be the Cost of Goods Sold after the proration?

A) $58,403.
B) $56,597.
C) $60,197.
D) $54,903.

Question 80

Travis Company's records show that overhead was overapplied by $10,000 last year.This overapplied overhead was closed out to the Cost of Goods Sold account at the end of the year.In trying to determine why overhead was overapplied by such a large amount,the company has discovered that $6,000 of depreciation on factory equipment was charged to administrative expense in error.Given the above information,which of the following statements is true?

A) Manufacturing overhead was actually overapplied by $16,000 for the year.
B) The company's net income is understated by $6,000 for the year.
C) Under the circumstances posed above,the error in recording depreciation would have no effect on operating income for the year.
D) The $6,000 in depreciation should have been charged to Work-in-Process rather than to administrative expense.