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Exam 19: Job Order Cost Accounting

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Question 51

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The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:

A) Predetermined overhead allocation rate.
B) Overhead variance rate.
C) Estimated labor cost rate.
D) Chargeable overhead rate.
E) Miscellaneous overhead rate.

F) A) and D)
G) B) and C)

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Question 52

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Since a predetermined overhead allocation rate is established before a period begins, this rate is revised many times during the period to compensate for inaccurate estimates previously made.

A) True
B) False

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Question 53

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Wilkes Manufacturing uses a job order cost accounting system that charges overhead to jobs on the basis of direct material cost. At year-end, the Goods in Process Inventory account shows the following. a. Determine the overhead rate used (based on direct material cost). b. Only one job remained in the goods in process inventory at December 31. Its direct materials cost is $60,000. How much direct labor cost and overhead cost are assigned to it?

Key Manufacturing Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000. (1) If the $28,000 cost of Key's goods in process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included? (2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

A materials requisition is a source document used by production managers to request materials for production and also used to assign materials costs to specific jobs or to overhead.

The predetermined overhead allocation rate is used to allocate overhead cost to jobs.

Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

A time ticket is a source document an employee uses to record the number of hours at work and that is used each pay period to determine the total labor cost.

Marshall Corp. uses a job order cost accounting system and worked only on Job 101 during the current period. Job 101 was sold for $460,000. The following information pertains to costs incurred for Job 101.

A manufacturing company uses an overhead allocation rate based on direct labor cost. The company's Goods in Process Inventory account has a $15,000 debit balance after all posting is completed, and the cost sheet of the one job still in process shows direct material costs of $6,600 and direct labor costs of $3,000. What is the company's overhead application rate?

The collection of cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Goods in Process Inventory account in the general ledger.

Bean Company uses a job order cost system and last period incurred $70,000 of overhead and $100,000 of direct labor. Bean estimates that its overhead next period will be $65,000. The company also expects to incur $100,000 of direct labor. If Bean bases its overhead applied on direct labor cost, what should be the overhead allocation rate for the next period?

A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.

A source document that production managers use to request materials for production and that is used to assign materials costs to specific jobs or to overhead is a:

Hancock Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Hancock estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Hancock incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.

Job order production systems would be appropriate for companies that produce custom homes, specialized equipment, and special computer systems.

Hancock Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Hancock estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Hancock incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the overhead application rate.

Alton Company has an overhead application rate of 160% and allocates overhead based on direct materials. During the current period, direct labor is $50,000 and direct materials used are $80,000. Determine the amount of overhead Alton Company should record in the current period.

Minchoy Corporation uses a job order cost accounting system. Five jobs were worked on during the current year. The predetermined overhead rate is 20% of direct labor costs. The following cost information is available (all materials and time ticket information applies to direct costs): Part 1-Complete the job cost sheets for each job. Part 2-Identify the amounts of each of the following accounts at the end of the period a. Work in Process _____________________ b. Finished Goods _____________________ c. Cost of Goods Sold _____________________

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