Question 1

Oddley Corp. uses a job order costing system. The following information pertains to costs applied to jobs during the current year:

Jobs still in process at the end of the year:
$167,000, which includes $65,000 direct labor costs.

Jobs finished and sold during the year:
$395,000, which includes $172,000 direct labor costs.

Jobs finished but unsold during the year:
$103,000, which includes $38,000 direct labor costs.

Oddley Corp.'s predetermined overhead rate is 60% of direct labor cost. At the end of the year, the company's records show that $189,000 of actual factory overhead has been incurred.

(a) Determine the amount of overapplied or underapplied overhead.

(b) Prepare the necessary journal entry to close the Factory Overhead account assuming that any remaining balance is not material.

Accepted Answer

$65,000 + $172,000 + $38,000 =$275,000

Question 2

Production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of direct labor costs. What is the gross profit on the sale of one unit of Product BJM?

Accepted Answer

The answer of Production of one unit of Product BJM...

Question 3

If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale?

Accepted Answer

A)   $8.00.
B)   $5.50.
C)   $2.50.
D)   $1.60.
E)   $0.90. D

Question 4

When direct labor costs are recorded, the journal entry is a debit to Factory Wages Payable and a credit to Work in Process Inventory.

Accepted Answer

A) True 
 B)False

Question 5

Describe the flow of the employee labor, both direct and indirect, through the inventory accounts.

Accepted Answer

The answer of Describe the flow of the employee labor,...

Question 6

Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $300,000, and direct labor costs to be $150,000. Actual overhead costs for the year totaled $330,000, and actual direct labor costs totaled $170,000. At year-end, Factory Overhead account is:

Accepted Answer

A)   Overapplied by $10,000.
B)   Overapplied by $170,000.
C)   Underapplied by $10,000.
D)   Overapplied by $20,000.
E)   Neither overapplied nor underapplied.

Question 7

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The predetermined overhead rate was:

Accepted Answer

A)   5.0%.
B)   12.0%.
C)   20.0%.
D)   500.0%.
E)   16.7%.

Question 8

The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.

Accepted Answer

A) True 
 B)False

Question 9

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

Accepted Answer

A) True 
 B)False

Question 10

When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

Accepted Answer

A) True 
 B)False

Question 11

What is a cost accounting system? What are the two basic types of cost accounting systems?

Accepted Answer

The answer of What is a cost accounting system? What...

Question 12

When a job involves producing more than one unit of a custom product, it is often called a job lot.

Accepted Answer

A) True 
 B)False

Question 13

Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor. How are these costs recorded?

Accepted Answer

A)   Debit Payroll Expense $28,900; credit Cash $28,900.
B)   Debit Payroll Expense $24,600; debit Factory Overhead $4,300; credit Factory Wages Payable $28,900.
C)   Debit Work in Process Inventory $24,600; Debit Factory Overhead $4,300; Credit Factory Wages Payable $28,900.
D)   Debit Work in Process Inventory $24,600; credit Factory Wages Payable $28,900.
E)   Debit Work in Process Inventory $28,900; credit Factory Wages Payable $28,900.

Question 14

Heintz Company's job order costing system applies overhead based on direct labor costs. The company's manufacturing costs for the current year were: direct materials, $108,000; direct labor, $144,000; and factory overhead, $36,000. At year-end, the total cost of Work in Process is $38,000, which includes $12,000 of direct labor cost. What amount of direct material cost is included in the ending Work in Process inventory?

Accepted Answer

The answer of Heintz Company's job order costing system applies...

Question 15

In a job order costing system, indirect labor costs are debited to the Factory Overhead account.

Accepted Answer

A) True 
 B)False

Question 16

Portside Watercraft uses a job order costing system. During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000, of which $24,000 were indirect. Portside incurred a factory payroll cost of $95,000, of which $25,000 was indirect labor. Portside uses a predetermined overhead rate of 170% of direct labor cost. The journal entry to record the allocation of factory wages to production is:

Accepted Answer

A)   Debit Work in Process Inventory $95,000; credit Factory Wages Payable $95,000.
B)   Debit Work in Process Inventory $95,000; credit Cash $95,000.
C)   Debit Factory Wages Payable $95,000; credit Cash $95,000.
D)   Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Factory Wages Payable $95,000.
E)   Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Cash $95,000.

Question 17

Match between columns
                        Premises: An asset account where costs are accumulated while jobs are being produced.
A perpetual record that is updated each time units of raw material are purchased and issued for use in production.
The amount by which actual overhead incurred in a period exceeds the overhead applied to jobs with the predetermined overhead rate.
A source document that is used to report how much time an employee spent working on a job or on overhead activities and the labor costs to assign to jobs or overhead.
A cost record maintained for each job in a job order costing system; it shows the costs of direct materials, direct labor, and overhead for each job.
A source document that production managers use to request materials needed for manufacturing and that is used to assign materials costs to specific jobs or to overhead.
The rate established prior to the beginning of a period that relates estimated overhead to an activity base such as estimated direct labor and is used to assign overhead cost to a job.
The amount by which the overhead applied to jobs in a period with the predetermined overhead rate exceeds the actual overhead incurred in a period.
An asset account where costs of completed jobs are kept until the jobs are delivered to customers.
The production of products in response to special orders; also called customized production.
Accumulates production costs and assigns them to products and services.

Accepted Answer

The Answer of Time ticket and Job order production and is...

Question 18

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

Accepted Answer

A) True 
 B)False

Question 19

Chen Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200.
Prepare the adjusting journal entry for over- or underapplied overhead .

Accepted Answer

The answer of Chen Service applied overhead on the basis...

Question 20

Cost accounting systems accumulate production costs and then assign them to products and services.

Accepted Answer

A) True 
 B)False

Exam 2: Job Order Costing and Analysis

Production of one unit of Product BJM used $27.50 of direct materials and $21.00 of direct labor. The unit sold for $76.00 and was assigned overhead at a rate of 30% of direct labor costs. What is the gross profit on the sale of one unit of Product BJM?

If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor, sold for $8.00, and was assigned overhead at the rate of 30% of direct labor costs, how much gross profit was realized from this sale?

When direct labor costs are recorded, the journal entry is a debit to Factory Wages Payable and a credit to Work in Process Inventory.

Describe the flow of the employee labor, both direct and indirect, through the inventory accounts.

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The predetermined overhead rate was:

The schedule of cost of goods manufactured for a job costing system includes total actual factory overhead.

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

What is a cost accounting system? What are the two basic types of cost accounting systems?

When a job involves producing more than one unit of a custom product, it is often called a job lot.

Oxford Company uses a job order costing system. In the last month, the system accumulated labor time tickets total $24,600 for direct labor and $4,300 for indirect labor. How are these costs recorded?

In a job order costing system, indirect labor costs are debited to the Factory Overhead account.

Match the following terms to the appropriate definition.

Actual factory overhead incurred in a job costing system is debited to a Factory Overhead general ledger account and credited to various other accounts.

Chen Service applied overhead on the basis of direct labor costs during the current year. Overhead applied was $16,500. Actual overhead incurred was $17,200. Prepare the adjusting journal entry for over- or underapplied overhead .

Cost accounting systems accumulate production costs and then assign them to products and services.