ACCT 3100 Job-Order Costing Ch. 2 & 3

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find

overhead applied to the job

Carlisle, Inc. had Sales of $500,000, Cost of goods sold of $400,000, and Selling and administrative expenses of $50,000. Gross margin is ______.

$100,000

Jones Company uses a job-order costing system with a predetermined overhead rate of 120% of direct labor cost. The job cost sheet for Job #420 showed that Jones Company spent $4,000 on direct materials and $5,000 on direct labor on the job. What is the total cost of Job #420?

$15,000 Direct materials + Direct labor + Predetermined overhead rate * Direct labor cost= $4,000 + $5,000 + 120% * $5,000 = $15,000

Given the following, calculate total manufacturing costs: Direct materials: $40,000; Direct labor: $100,000; Manufacturing overhead applied: $120,000; Beginning Work in process inventory: $30,000; Ending Work in process inventory: $12,000

$260,000 Total manufacturing costs= $40,000 + $100,000 + $120,000 = $260,000

Murphy Manufacturing estimated total manufacturing overhead for the year to be $100,000 and that 5,000 direct-labor hours would be used. Actual overhead was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during the year that used 200 direct labor-hours was ______. .

$4,000 The predetermined overhead rate= $100,000 / 5,000 direct labor hours = $20 per direct labor hour * 200 direct labor hours = $4,000

Given the following, calculate the cost of goods available for sale. Cost of goods manufactured of $410,000 Beginning Finished goods inventory of $110,000 Ending Finished goods inventory of $125,000

$520,000 $410,000 + $110,000 = $520,000

Job XYZ has a total manufacturing cost of $600. If the mark-up percentage is 40%, the job will sell for $

$840 $600 * 40%= $240 $600 + 240 = $840

The journal entry to record the purchase of materials credits

Accounts payable

What side of the Manufacturing overhead account is applied manufacturing overhead entered on?

Always the credit side

What side of the Manufacturing overhead account is actual manufacturing overhead entered on?

Always the debit side

Which of the following are used to calculate Cost of goods available for sale on the schedule of cost of goods sold?

Beginning finished goods inventory, costs of goods manufactured

The journal entry to record a completed job debits ______.

Finished goods

When jobs are sold their costs are transferred out of ______.

Finished goods

Which of the following would be considered direct materials in a service firm that uses job-order costing?

Paperwork at a law firm

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?

The salary of a manager at a hair salon. This would be considered overhead.

Why is the unit product cost different from the cost that would be incurred if another (additional) unit were produced?

The unit product cost is an average, not an incremental cost.

A company requisitioned $40,000 in direct materials and $30,000 in indirect materials from the storeroom to be used in production. The journal entry to record this transaction debits ______.

Work in process $40,000, debit manufacturing overhead $30,000 and credit Raw materials $70,000

The journal entry to record issuing both direct and indirect materials into production debits ______.

Work in process and manufacturing overhead

A cost driver is

a factor that causes overhead costs to occur

Cost-plus pricing occurs when

a markup percentage is added to the cost of a job

Which of the following would not be a good allocation base for manufacturing overhead?

accounting hours

When a company creates overhead rates based on the actions it performs, it is employing an approach called _____ - ____ costing

activity based

The Manufacturing Overhead account is debited when ______.

actual overhead costs are incurred

Overapplied or underapplied overhead is the difference between ______.

actual total overhead and total overhead applied

The process used to assign overhead costs to products is called overhead

allocation

To calculate total manufacturing costs, add direct materials, direct labor and ______.

applied manufacturing overhead

The total cost job is calculated by adding the total of direct labor cost, direct materials cost and

applied manufacturing overhead cost

Bar codes can be used to

automatically record and post direct labor costs to jobs

An essential quality of an overhead allocation base is that it must

be common to all the company's products and services

Costs assigned to units of product in absorption costing include _____ manufacturing costs.

both variable and fixed

When a predetermined markup is applied to a base to determine the target selling price, the company is using _____ ____ pricing

cost plus

The adjustment for overapplied overhead ______ net income.

decreases cost of goods sold and increases

Widely used allocation bases in manufacturing are:

direct labor hours, machine hours, direct labor cost, units of product

Categories of manufacturing costs include:

direct materials, direct labor, manufacturing overhead

To calculate the unit product cost using the job cost sheet ______ by the number of units produced.

divide the total job cost

Manufacturing overhead costs include ______.

factory maintenance wages, factory utilities, factory rent

Selling and administrative costs first appear on the ______.

income statement

The adjustment for underapplied overhead ______ net income. Multiple choice question.

increases cost of goods sold and decreases

Labor costs charged to Manufacturing Overhead represent ______ labor costs.

indirect

A journal entry that debits Work in process and Manufacturing overhead and credits Raw materials records the ______.

issuance of materials

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the

job cost sheet

Typical cost drivers include:

machine-hours, flight-hours, computer time

The schedule of cost of goods ____ summarizes costs that remain in Work in process inventory and that have been transferred from Work in process to Finished goods inventory.

manufactured

Manufacturing overhead consists of all ______.

manufacturing costs other than direct labor and direct materials

Factory labor charges that cannot be easily traced to a job are treated as

manufacturing overhead

The period ends

manufacturing overhead is closed

overhead is applied to work in process

manufacturing overhead is credited

Actual overhead is incurred

manufacturing overhead is debited

Manufacturing overhead consists of:

many different kinds of indirect costs

Companies that use job-order costing make

many different products

An allocation base is a

measure of activity used to assign overhead costs to products and services

The approach used when overhead is applied to jobs by multiplying a predetermined overhead rate by actual amount of the allocation base incurred by the jobs is called ____ costing

normal

Applied manufacturing overhead will most likely ______ actual manufacturing overhead.

not equal

When labor costs are incurred, _________ labor costs are added directly to the Work in Process account.

only direct

The formula for applying overhead to a specific job is:

predetermined overhead rate * amount of allocation base incurred by job

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ____

purchase of materials

A journal entry that debits Raw Materials and credits Accounts Payable is recording the ______.

purchase of materials

The journal entry to record issuing materials to be used in production credits____

raw materials

The journal entry to record the purchase of materials debits ______.

raw materials

A multiple predetermined overhead rate system is more accurate than a plantwide overhead rate system because

reflects differences in how overhead costs are incurred within departments

The schedule of cost of goods ___ summarizes costs that remain in Finished goods inventory and that have been transferred to Cost of goods sold

sold

When all of a company's job cost sheets are viewed collectively they form what is known as a ________.

subsidiary ledger

In the formula Y= a + bX, X represents the estimated

total amount of the allocation base

In the formula Y = a + bX, a represents estimated

total fixed manufacturing overhead cost

The unit product cost is the same as

total job cost divided by number of units, average product cost per unit

A bill of materials contains the

type of each direct material needed to complete a unit of product quantity of each direct material needed to complete a unit of product

In the formula Y = a + bX, b represents the estimated ______.

variable manufacturing overhead cost per unit

The average manufacturing overhead cost per unit tends to

vary from one period to the next

Allocation bases that do not drive overhead costs ______.

will not accurately measure the cost of overhead used

The journal entry to record a completed job credits

work in process

Jones Company uses a job-order costing system with a predetermined overhead rate of 120% of direct labor cost. The job cost sheet for Job #420 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. The unit cost of Job #420 is ______

$2.00 The total cost of Job #420 = Direct materials + direct labor + overhead (predetermined overhead rate * direct labor cost) = $4,000 + $5,000 + 1.20 * $5,000 = $15,000. Unit product cost = $15,000 / 7,500 units = $2.00 per unit

Given the following, calculate the cost of goods available for sale. Cost of goods manufactured of $234,000 Beginning Finished goods inventory of $18,000 Ending Finished goods inventory of $24,000

$252,000 $234,000+$18,000=$252,000