MBA 700 - Module 3

Large custom aircraft manufacturers normally use: Question 17Select one: a.Job order costing. b.Full costing. c.Process costing. d.Mixed costing.

a.Job order costing.

Which of the following product situations is better suited to job order costing than to process costing? Select one: a.Costs are accumulated by department. b.The value of work in process is based on assigning standard costs. c.The costs are easily traced to a specific product. d.Each product batch is exactly the same as the prior batch.

c.The costs are easily traced to a specific product.

In a job order cost system, indirect labor incurred is debited to which account? Select one: a.work in process inventory b.finished goods inventory c.manufacturing overhead d.cost of goods sold

c.manufacturing overhead

In a job order cost system, utility expense incurred is debited to which account? Select one: a.finished goods inventory b.cost of goods sold c.work in process inventory d. manufacturing overhead

d. manufacturing overhead

Which of the following is not a feature of job order production? Select one: a.Low standardization. b.Diverse products and services. c.Custom orders. d.High production volume. e.High product flexibility.

d.High production volume.

During production, to what are the costs in job order costing applied? Select one: a.each individual department b.manufacturing overhead c.cost of goods sold d.each individual product

d.each individual product

Oxford Company uses a job order costing system. This month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. The journal entry to record direct labor consists of a: a.Debit Payroll Expense $24,600; credit Factory Wages Payable $24,600. b.Debit Work in Process Inventory $28,900; credit Factory Wages Payable $28,900. c.Debit Payroll Expense $24,600; credit Cash $24,600. d.Debit Work in Process Inventory $4,300; credit Factory Wages Payable $4,300. e.Debit Work in Process Inventory $24,600; credit Factory Wages Payable $24,600.

e.Debit Work in Process Inventory $24,600; credit Factory Wages Payable $24,600.

Which of the following is a prime cost? Select one: a.administrative expenses b.direct labor c.indirect materials d.factory depreciation expenses

b.direct labor

Which document lists the inventory that will be removed from the raw materials inventory? Select one: a.receiving document b.materials requisition form c.job cost sheet d.purchase order

b.materials requisition form

In a job order cost system, raw materials purchased are debited to which account? Select one: a.work in process inventory b.raw materials inventory c.finished goods inventory d.cost of goods sold

b.raw materials inventory

In a job order cost system, overhead applied is debited to which account? Select one: a.manufacturing overhead b.work in process inventory c.cost of goods sold d.finished goods inventory

b.work in process inventory

Which of the following is a conversion cost? Select one: a.administrative expenses b.raw materials c.factory depreciation expenses d.direct materials

c.factory depreciation expenses

Which document shows the cost of direct materials, direct labor, and overhead applied for each specific job? Select one: a.job cost sheet b.receiving document c.purchase order d.materials requisition form

a.job cost sheet

A document used to assign direct labor costs to individual jobs and track how much time employees spend on each job is called a: Select one: a .Factory overhead ledger b.General ledger c.Factory payroll record d.Payroll register e.Time ticket

e.Time ticket

Which document lists the total direct materials used in a specific job? Select one: a.materials requisition form b.purchase order c.receiving document d.job cost sheet

d.job cost sheet

Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $400,000, and direct labor costs to be $2,000,000. Actual overhead costs for the year totaled $380,000, and actual direct labor costs totaled $1,800,000. At year-end, Factory Overhead is: Question 19Select one: a.Underapplied by $20,000 b.Overapplied by $200,000 c.Underapplied by $200,000 d .Overapplied by $20,000 e.Neither overapplied nor underapplied

a.Underapplied by $20,000

A job order costing system is most likely used by which of the following? Select one: a.an accounting firm specializing in tax returns b.a stereo manufacturing company c.a paper manufacturing company d.a pet food manufacturer

a.an accounting firm specializing in tax returns

Assigning indirect costs to specific jobs is completed by which of the following? a.using the predetermined overhead rate b.applying the costs to manufacturing overhead c.using the manufacturing costs incurred d.applying the indirect labor to the work in process inventory

a.using the predetermined overhead rate

Which document lists the total direct labor used in a specific job? Select one: a.employee time ticket b.purchase order c.receiving document d.job cost sheet

d.job cost sheet

A company that uses job order costing reports the following information. Overhead is applied at the rate of 60% of direct materials. The company has no beginning Work in Process or Finished Goods inventories. Jobs 1 and 3 are not finished by the end of March, and Job 2 is finished but not sold by the end of March. Job 1 Job 2 Job 3 Direct materials used $ 13,200 $ 17,200 $ 6,200 Direct labor used $ 21,200 $ 11,200 $ 9,200 Determine the total dollar amount of Work in Process Inventory at the end of March. Question 2Select one: a.$36,800 b.$98,240 c.$48,520 d.$61,440

Answer Calculation of the total dollar amount of Work in Process Inventory at the end of March:= Total cost, Job 1 + Total cost, Job 3= Job 1: (13,200 + 21,200) + (13,200*60%) = 42,320 Job 3: (6,200 + 9,200) + (6,200*60%) = 19,120 WIP: 42,320 + 19,120 = 61,440

Minstrel Manufacturing uses a job order costing system. During the month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost. Minstrel's beginning and ending Work in Process Inventory are $15,000 and $27,000 respectively. Compute the cost of jobs transferred to Finished Goods Inventory. Select one: a.$440,000 b.$415,000 c.$413,000 d.$428,000

BEG WIP + Total Manufactoring Costs - END WIP TMC = DM + DL + OH DM = 195,000 - 30,000 = 165,000 DL: 150,000 - 40,000 = 110,000 OH: DL (110,000)*150% = 165,000 TMC = 165,000 + 110,000 + 165,000 = 440,000 BEG WIP (15,000) + TMC (440,000) - END WIP (27,000) = 428,000

The activity base for service industries is most likely to be ________. Select one:a. direct labor cost b.machine hours c.direct labor hours d.administrative salaries

c.direct labor hours

A company makes bikes from recycled metal. For a recent job lot of 200 bikes, the company incurred direct materials costs of $6,000 and direct labor costs of $2,000. Factory overhead applied to this job uses a predetermined overhead rate of 150% of the direct materials cost. What is the cost per bike? a.$95 b.$65 c.$55 d.$85 e.$75

D. $85 Total Job cost = Direct Materials + Direct Labours cost + Factory overhead applied TBC = $6000 + 2,000 + 9,000 <--- 6,000 x 150% Cost per bike= Total job cost/ no of bikes produced $17000/200 = $85

Andrew Industries purchased $170,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $23,000, and the materials used to complete jobs during the month were $145,500 of direct materials and $13,500 of indirect materials. What is the ending Raw Materials Inventory balance for March? Select one: a.$12,000 b.$24,500 c.$34,000 d.$47,500

Ending Raw Materials Inventory balance for March = Beginning Raw Materials Inventory + Raw Material Purchase - Direct Raw Material Used - Indirect Raw Material used 23,000 + 170,000 - 14,500 - 13,500 = 34,000

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation used $2,500 of direct materials and used $4,000 of direct labor. The job was not finished in September. An additional $3,000 of direct materials and $6,500 of direct labor were needed to finish the job in October. The company applies overhead at the end of each month at a rate of 200% of the direct labor cost. What is the amount of job costs added to Work in Process Inventory during October? Select one: a.$16,000 b.$22,500 c.$26,000 d.$32,000

OH: 6,500 * 200 % = 13,000 DM: 3,000 + DL: 6,500 + OH: 13,000 =22,500

B&T Company's production costs for May are: direct labor, $22,000; indirect labor, $7,400; direct materials, $15,900; property taxes on production facility, $890; factory heat, lights and power, $1,090; and insurance on plant and equipment, $290. B&T Company's factory overhead incurred for May is: Select one: a.$47,570 b.$23,300 c.$9,670 d.$2,270 e.$7,400

The factory overhead is computed by adding the indirect labor and indirect costs. The other factory expenses except indirect material and labor are the indirect costs. Indirect Labor: 7,400 + Property Taxes: 890 + Factory Heat, lights: 1,090 + Insurance: 290 = 9,670

The balance in the Work in Process Inventory account at any point in time equals: Select one: a.the costs for jobs finished during the period but not yet sold. b.the sum of the manufacturing costs for all jobs in process but not yet completed. c.the manufacturing cost of jobs ordered but not yet started into production. d.the sum of the materials, labor, and overhead costs paid during the period. e.the manufacturing costs of all jobs started during the period, completed or not.

b.the sum of the manufacturing costs for all jobs in process but not yet completed.

Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. The correct journal entry to record the $73,000 indirect labor for the month is: Question 16Select one:a.Debit Supervisor Wage Expense; credit Factory Overheadb.Debit Factory Wages Payable; credit Factory Overheadc.Debit Factory Overhead; credit Factory Wages Payabled.Debit Supervisor Wage Expense; credit Factory Wages Payable

c. Debit Factory Overhead; credit Factory Wages Payable

Materials requisitioned to Work In Process and Manufacturing Overhead departments amounted totally to $20,000, of which $15,000 belongs to Direct Materials and the remaining belongs to Indirect Materials. A Journal Entry to record this transaction would include: Select one: a.Debit to Materials Inventory by $15,000. b.Debit to Materials Inventory by $20,000. c.Debit to Work in Process by $15,000. d.Debit to Work in Process by $20,000.

c.Debit to Work in Process by $15,000.

In a job order cost system, which account shows the overhead used by the company? Select one: a.cost of goods sold b.work in process inventory c.finished goods inventory d.manufacturing overhead

d.manufacturing overhead