Ch 5 Practice

Vermillion Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Vermillion worked on Job 15 in May. Consider the following information regarding Job 15: Balance, 5/1 $32,000 Direct materials 26,000 Direct labor 30,000 Engineering hours 25 Number of parts 120 Direct labor hours 1,800 Engineering design rate $40 Purchasing rate 10 Other overhead rate 8 Based on the provided data, calculate the total cost for Job 15. $106,400 $104,600 $160,400 $140,600

$104,600

Sky's the Limit produces a variety of niche products for specific clients. During August, Sky's the Limit worked on Job X-10 for one of its regular customers.The following information is related to Job X-10: Job X-10 Beginning balance $1,500 Materials requisitioned 5,000 Direct labor cost 3,500 Overhead is assigned at the rate of 50% of direct labor cost. From the provided information, calculate the total cost of Job X-10. $11,750 $10,850 $12,000 $12,125

$11,750 Cost of Job X-10 = Beginning balance + Materials requisitioned + Direct labor cost + Applied overhead (0.50 × Direct labor cost) = $1,500 + $5,000 + $3,500 + (0.50 × $3,500) = $11,750

Beaver Manufacturing expects to produce 20,000 units next year and has budgeted overhead for the year at $240,000. Over the past four years, Beaver Manufacturing produced the following number of units: Year1 22,000 Year2 17,000 Year3 21,000 Year4 20,000 Calculate the predetermined overhead rate that Beaver Manufacturing will apply if normal capacity is used. $15 $12 $14 $10

$12 Average activity usage = (22,000 + 17,000 + 21,000 + 20,000) ÷ 4 = 20,000 units. Predetermined overhead rate = Budgeted overhead for the year ÷ Average activity usage = $240,000 ÷ 20,000 = $12.

El Torro Company produces industrial gauging equipment that it sells to other companies. Budgeted overhead for the year was $260,000, and budgeted direct labor hours were 20,000. The average wage rate for direct labor is expected to be $25 per hour. During January, El Torro Company worked on four jobs. Data relating to these four jobs follow: Job A Job B Job C Job D Beginning balance $23,700 $34,600 $17,000 $ 0 Materials requisitioned 18,900 21,400 8,350 12,000 Direct labor cost 10,000 18,500 3,000 2,900 Applied overhead 6,500 9,975 2,250 1,750 Total cost $59,100 $84,475 $30,600 $16,650 During January, Jobs A, B, and C were completed, and Job A was sold at 125% of cost. Job D remains unfinished at the end of the month. Assuming the beginning balance of Finished Goods is $15,000, calculate the ending balance of Finished Goods for January. $130,075 $31,650 $189,175 $99,475

$130,075

Scarlet Company is a job-order firm that follows a normal costing approach. Consider the following information regarding Scarlet Company: Estimated overhead costs $7,500 Estimated direct labor hours 1,500hours Hours worked for Job10 45hours For Job 10, with a total of 45 hours worked, the amount of overhead cost posted is $235. $215. $250. $225.

$225.

Turquoise Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Turquoise identified three overhead activities and related drivers. Budgeted information for the year is as follows: Activity Cost Driver Amount of Driver Engineering design $150,000 Engineering hours 5,000 Purchasing 120,000 Number of parts 10,000 Other overhead 225,000 Direct labor hours 25,000 Turquoise worked on four jobs in May. Data are as follows: Job 10 Job 11 Job 12 Job 13 Balance, 5/1 $35,000 $42,850 $30,090 $ 0 Direct materials $29,000 $39,000 $27,550 $12,000 Direct labor $41,000 $39,500 $44,000 $21,900 Engineering hours 25 15 20 120 Number of parts 175 200 250 600 Direct labor hours 2,600 2,500 2,700 1,500 Considering the information given, the activity rates for each of the three overhead activities are $25 per engineering hour, $11 per part, and $8 per direct labor hour. $30 per engineering hour, $12 per part, and $9 per direct labor hour. $28 per engineering hour, $13 per part, and $11 per direct labor hour. $27 per engineering hour, $10 per part, and $10 per direct labor hour.

$30 per engineering hour, $12 per part, and $9 per direct labor hour.

Which of the following refers to the fact that there is a greater chance for deviation in the execution of services than in the manufacturing of products? Perishability Inseparability Intangibility Heterogeneity

Heterogeneity

Which of the following statements is true of abnormal spoilage? It is charged to Finished Goods. It is unexpected and not part of normal operations. It is expected due to the nature of the production process. It is charged to Work in Process.

It is unexpected and not part of normal operations.

Which of the following statements is true of an actual cost system? It uses predetermined direct materials cost, predetermined direct labor cost, and actual overhead costs. It uses predetermined direct materials, direct labor, and overhead costs. It measures overhead costs on a predetermined basis and uses actual costs for direct materials and direct labor. It measures costs of direct materials on a predetermined basis and uses actual costs for direct labor and overhead.

It uses predetermined direct materials, direct labor, and overhead costs.

A leaky roof that allows rain to spoil the jobs beneath is charged to Loss from Abnormal Spoilage. Loss from Normal Spoilage. Cost of Goods Sold. Finished Goods.

Loss from Abnormal Spoilage.

An unexpected spoilage that is not part of normal operations is charged to Finished Goods. Work in Process. Loss from Abnormal Spoilage. Cost of Goods Sold.

Loss from Abnormal Spoilage.

Which source document asks for the description, quantity, and unit cost of the direct materials issued, as well as for the job number? Materials requisition form Job-order cost sheet Time ticket Work-in-process inventory file

Materials requisition form

Assume Excellent Company is a job-order firm that follows a normal costing approach. Which of the following statements reflects the correct approach of accounting for overheads? Overhead is assigned to production using indirect labor hours. Actual overheads are assigned to jobs. Overhead is applied to each job using a predetermined rate. Actual overheads incurred need not be accounted for.

Overhead is applied to each job using a predetermined rate. The measurement problems associated with the use of actual overhead costs are solved by the use of estimated overhead costs under normal costing. Overhead is applied to each individual job using a predetermined overhead rate.

Which of the following is a key feature of job-order costing? The costs are assigned to one or more production processes. The products considered lose their identity as they are a part of mass production. The products considered are all homogenous in nature. The cost of one product differs from that of another product.

The cost of one product differs from that of another product. For job-order production systems, costs are accumulated by job. This approach to assigning costs is called a job-order costing system. The key feature of job-order costing is that the cost of one job differs from that of another job and must be monitored separately.

Cleves Company is a job-order costing firm that uses activity-based costing to apply overhead to jobs. Cleves worked on two jobs in August. Data are as follows: Job 81 Job 82 Balance, 8/1 $42,000 $35,000 Direct materials 28,000 26,000 Direct labor 32,000 30,000 Engineering design 1,200 1,000 Purchasing 1,600 1,750 Other overhead 16,525 14,250 Which of the following would be true if Job 81 required no engineering hours? The engineering applied to Job 81 would be zero, and the cost of Job 81 would decrease by $1,200. The engineering applied to Job 82 would be zero, and the cost of Job 82 would decrease by $1,200. The engineering applied to Job 81 would increase by $1,200. The engineering applied to Job 82 would increase by $1,200.

The engineering applied to Job 81 would be zero, and the cost of Job 81 would decrease by $1,200. Activity-based costing requires data to be collected on each activity cost and driver. Then the activity cost is assigned to each job since it is unique in its use of activity drivers. If Job 81 required no engineering time, then the engineering applied to Job 81 would be zero, and the cost of Job 81 would decrease by $1,200.

Which of the following statements is true of services? They can be inventoried to be consumed later. They are homogeneous in nature. The production and consumption of services can be separated. They are intangible in nature.

They are intangible in nature. A service is characterized by its intangible nature. It is not separable from the customer and cannot be inventoried.

Which of the following statements is true of labor cost flows associated with job-order costing? They reflect both indirect labor and administrative overhead costs. They reflect only indirect labor cost. They reflect both direct and indirect labor costs. They reflect only direct labor cost.

They reflect only direct labor cost. The time tickets filled out by individual laborers are the source of information for posting labor cost flows. The labor cost flows reflect only direct labor cost. Indirect labor is assigned as part of overhead.

Which of the following are the essential characteristics of job-order costing? Homogeneous products and products that incur the same costs Wide variety of unique products and products that incur the same costs Wide variety of unique products and products that incur different costs Homogeneous products and products that incur different costs

Wide variety of unique products and products that incur different costs If a firm produces unique products in small batches, and if those products incur different costs, then the firm must keep track of the costs of each product or batch. This is referred to as a job-order costing system

The cost of goods that have been sold, after an adjustment is made for the period's overhead variance, is called the actual overhead. adjusted cost of goods sold. normal cost of goods sold. finished goods cost flow.

adjusted cost of goods sold.

The association of production costs with the units produced is referred to as cost assignment. depletion. accumulation. measurement.

assignment.

Using a single rate, based on direct labor hours, to assign overhead leads to overcompensated manufacturing costs. accurate cost assignments. inaccurate cost assignments. undercompensated manufacturing costs.

inaccurate cost assignments. Using a single rate based on direct labor hours to assign overhead may lead to inaccurate cost assignments, in that too much or too little overhead is assigned.

A work-in-process inventory file is the collection of all job cost sheets. material requisition forms. purchase requisition forms. time tickets.

job cost sheets.

The cost of goods sold, before any adjustments are made for an overhead variance, is called adjusted cost of goods sold. finished goods cost flow. actual overhead. normal cost of goods sold.

normal cost of goods sold.