Chapter 3 Dynamic Module

Brockton Corporation, which allocates manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. Actual manufacturing overhead costs incurred $35,000 Manufacturing overhead allocated to jobs 33,800 Underallocated or overallocated Manufacturing overhead ? Calculate the manufacturing overhead and indicate if the remainder is underallocated or overallocated for the year.

$1,200 underallocated

Baker Corporation applies manufacturing overhead on an annual basis. The actual manufacturing overhead costs incurred were $210,600 and the manufacturing overhead allocated to jobs was $209,000. Calculate the manufacturing overhead and indicate whether the manufacturing overhead was overallocated or underallocated.

$1,600 underallocated

Athens Machining had one job in Work in Process Inventory at the beginning of the month, Job 1376. The costs incurred to date on the job included $12.50 per direct labor hour. The total direct labor hours was 150 direct labor hours. How much manufacturing overhead (MOH) should the manager allocate to Job 1376?

$1,875

Chelsea, Inc. uses the job costing method and designates the direct labor hours as the allocation base. In 2016, the total estimated and actual overhead costs for Job 3489 were $250,000 and $275,000, respectively. The total estimated and actual direct labor hours for Job 3489 were 25,000 and 28,000, respectively. What is the predetermined manufacturing overhead (MOH) rate per direct labor hour (DLH) for Job 3489? (round your answer to the nearest $.01)

$10.00

Cross dishware manufactures a custom line of pottery. The company uses a job-order costing system. During June, the following costs were incurred on Job CD4340: direct materials $3,500 and direct labor $6,400. In addition, there was $2,500 of selling and shipping costs incurred on the job. The manager applied manufacturing overhead at the rate of $32 per direct labor-hour and Job CD4340 required 100 direct labor-hours. If Job CD4340 consisted of 1,000 pieces of pottery, the cost of goods sold per piece was ________.

$13.10

Echo Corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. During the year, the company's Finished Goods Inventory account was debited for $360,000 and credited for $338,800. The ending balance in the Finished Goods Inventory account was $36,600. At the end of the year, the manager overapplied $15,900 to manufacturing overhead. Which of the following choices represent the actual manufacturing overhead cost for the year if the manager allocated $169,300 to manufacturing overhead?

$153,400

Levitts Corporation allocates overhead using an approach based upon direct labor-hours. Budgeted factory overhead was $150,000, budgeted direct labor-hours were 30,000. Actual factory overhead was $164,500, and actual direct labor-hours were 32,500. What amount of manufacturing overhead should the manager allocate to the job?

$162,500

Athens Machining had one job in Work in Process Inventory at the beginning of the month: Job 1376. The costs incurred to date on the job included $14.00 per direct labor hour. The total direct labor hours were 160 direct labor hours. How much manufacturing overhead (MOH) should the manager allocate to Job 1376?

$2,240 ($14.00 x 160) = 2240

The direct labor rate for Brent Corporation is $9.00 per hour, and manufacturing overhead is applied to products using a predetermined overhead rate of $6.00 per direct labor-hour. During May, the company purchased $60,000 in raw materials (all direct materials) and worked 3,200 direct labor-hours. The Raw Materials Inventory (all direct materials) decreased by $3,000 between the beginning and end of May. The Work in Process Inventory on May 1 consisted of one job which had been charged with $4,000 in direct materials and on which 300 hours of direct labor time had been worked. There was no Work in Process Inventory on May 31. If overhead was underallocated by $2,500 during May, what is the actual manufacturing overhead cost?

$21,700

Scotts Corporation allocates overhead using an approach based upon machine-hours. Budgeted factory overhead was $266,400, budgeted machine-hours included 18,500. Actual factory overhead was $287,920, and 19,050 actual machine-hours. How much manufacturing overhead should the manager allocate to the job?

$274,320

Chelsea, Inc. uses the job costing method and uses direct labor hours as the allocation base. In 2016, the total estimated and actual overhead costs for Job 3489 were $250,000 and $275,000, respectively. The total estimated and actual direct labor hours for Job 3489 were 25,000 and 28,000, respectively. Which of the following represents the MOH allocated to Job 3489?

$280,000

Johnson Construction Company uses cost-plus pricing to determine costs and place bids on local jobs. The manager needs to compute the cost-plus price to place a bid on a community swimming pool, deck, and spa. The estimated cost associated with the new project is $225,000. The markup on the project cost is 40%. What is the cost-plus price required to bid on the new project?

$315,000 [$225,000 + (40% x $225,000)] = $225,000 + $90,000 = $315,000

The following data have been recorded for the recently completed Job 323 on its job cost sheet. Direct materials cost was $2,260. A total of 37 direct labor-hours and 141 machine-hours were worked on the job. The direct labor wage rate is $13 per labor-hour. The corporation applies manufacturing overhead based on machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost for the job on its job cost sheet would be ________.

$4,715

Tucker Company uses the job costing method. For 2016, the total estimated manufacturing cost was $250,000. The total actual manufacturing overhead was $275,000, and the total allocated overhead was $280,000. The impact on operating income of disposing of the over/under allocated manufacturing overhead cost is a ________.

$5,000 increase

In planning for the upcoming year, managers of Sesame Industries estimated $532,000 in manufacturing overhead, 25,000 direct labor hours, and 100,000 machine hours (MHR). If the manager allocates overhead based on machine hours, what is the predetermined manufacturing rate for the coming year?

$5.32/MHR

Job 593 was recently completed. The following data have been recorded on its job cost sheet: Direct materials $3,190 Direct labor-hours 71 labor-hours Direct labor wage rate $15 per labor-hour Machine-hours 175 machine-hours The corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. Which of the following should the manager record as the total cost on the job cost sheet for Job 593?

$6,705

Johnson Construction Company uses cost-plus pricing to determine costs and place bids on local jobs. The manager needs to compute the cost-plus price to place a bid on a custom room addition job. The estimated cost associated with the new room addition is $500,000. The markup on the project cost is 35%. What is the cost-plus price required to bid on the new custom room addition job?

$675,000

Artsy Sportswear manufactures a specialty line of silk-screened T-shirts. The company uses a job-order costing system. During May, the manager incurred the following costs on Job PS4: direct materials $27,400 and direct labor $9,600. In addition, the manager incurred selling and shipping costs of $14,000. The manager applied manufacturing overhead at the rate of $25 per machine-hour and Job PS4 required 160 machine-hours. What was the cost of goods sold per shirt if Job PS4 consisted of 5,000 shirts?

$8.20

McGee Industries uses direct labor cost as the manufacturing overhead (MOH) allocation base, instead of direct labor hours. The manufacturing overhead totals $4,470 and the total direct labor costs are $20,000. Which of the following choices best represents the predetermined MOH rate based on direct labor cost?

22.35% DL cost

Which of the following entries represents the correct entry to assign direct labor to a job?

A debit to Work in Process Inventory and a credit to Wages Payable

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

Advertising agency

Which of the following is NOT a characteristic of the job costing method?

Companies typically produce a large quantity of identical units

Which of the following is a characteristic of the process costing method?

Companies typically produce a large quantity of identical units

Which industry is least likely to use the process costing method?

Construction

Which industry is most likely to use the job costing method?

Construction

A manager might implement a job order costing system at which of the following businesses?

Custom-home builder

Which of the following entries represents the correct entry to assign indirect labor to a job?

Debit Manufacturing Overhead and credit Wages Payable

Which of the following represent the manufacturing cost information on a job cost record?

Direct materials, direct labor, and manufacturer overhead

Harp Music Corporation manufactures violins, violas, cellos, and fiddles and uses a job-order costing system. What type of account should Harp credit when goods are sold?

Finished Goods Inventory

Altoid Company sold most of its inventory produced during the period. The manager needs to close the $1,200 balance of Manufacturing Overhead. The company uses a predetermined manufacturing overhead rate to allocate manufacturing overhead to individual jobs. Which of the following is the correct entry to close the books at the end of the period?

Make an adjusting entry to debit Cost of Goods Sold for $1,200 and credit Manufacturing Overhead for $1,200.

Harp Music Corporation manufactures violins, violas, cellos, and fiddles and uses a job-order costing system. What account should Harp debit when the production manager has earned her salary?

Manufacturing Overhead

The total estimated manufacturing overhead costs / total estimated amount of the allocation base provides managers information to compute which of the following?

Predetermined MOH rate

The total estimated manufacturing overhead costs/total estimated amount of the allocation base provides managers information to compute which of the following?

Predetermined MOH rate

Which of the following represents a TRUE statement about the flow of inventory through a manufacturing system?

Raw materials (RM) inventory includes material maintained in storerooms at or near the factory until the manager moves those materials to production

Which statement is TRUE about job costing for service versus manufacturing companies?

Service companies use fewer direct materials.

A company has a $3,600 credit balance in Manufacturing Overhead at the end of the accounting period. Which of the following represents the correct entry process?

The manager makes an adjusting entry to debit Manufacturing Overhead for $3,600 and credit to Cost of Goods Sold for $3,600.

Managers use which of the following calculations to find the predetermined manufacturing overhead (MOH)?

Total estimated manufacturing overhead costs / Total estimated amount of the allocation base

Each of the following choices represents a correct journal entry to record the purchase of raw materials EXCEPT ________.

a debit to Finished Goods Inventory

Overallocated manufacturing overhead means the _______.

allocated manufacturing overhead cost was greater than the actual manufacturing overhead cost

Underallocated manufacturing overhead means the ________.

allocated manufacturing overhead cost was less than the actual manufacturing overhead cost

Tucker Company uses the job costing method. For 2016, the total estimated manufacturing cost was $250,000. The total actual manufacturing overhead was $275,000 and the total allocated overhead was $280,000. The correct adjustment to COGS to dispose of the over/under allocated manufacturing overhead cost is to ________.

credit COGS $5,000

To record the purchase of raw materials in a job cost record, it would be incorrect to ________.

debit Finished Goods Inventory

The production schedule ________.

indicates the quantity and types of inventory scheduled for manufacturing during the period

The manufacturing cost information on a job cost record includes each of the following EXCEPT ________.

job number and start time

If the amount of manufacturing overhead allocated to jobs is more than the amount of manufacturing overhead costs actually incurred, the overhead is ________.

overallocated

Which of the following choices indicates the quantity and types of inventory the manager scheduled to be manufactured during the period?

production schedule

A manager maintains ________ in a storeroom in or near the factory until the materials transfer to production.

raw materials (RM) inventory

Overallocation of overhead occurs when ________.

the manufacturing overhead account has a credit balance at the end of the period

Underallocation of overhead occurs when ________.

the manufacturing overhead account has a debit balance at the end of the period

If the amount of manufacturing overhead allocated to jobs is less than the amount of manufacturing overhead costs actually incurred, the overhead is ________.

underallocated

One of the primary differences between job costing for service and manufacturing companies is that service firms generally

use fewer direct materials