Accounting Chapter 15:

Wave Company manufactures customized desks. The following pertains to Job No. 978: Direct materials used $9,450 Direct labor hours worked 360 Direct labor rate per hour $15.00 Machine hours used 300 Applied factory overhead rate per machine hour $22.00 What is the total manufacturing cost for Job No. 978?

. $21,450 (9,450 + (360*15=5400) + (300*22=6600); (9450+5400+6600 = 21,450)

A materials requisition slip showed that direct materials requested were $58,000 and indirect materials requested were $9,000. The entry to record the transfer of materials from the storeroom is

WIP inventory MO Raw materials inv.

A company expected its annual overhead costs to be $900,000 and direct labor costs to be $1,000,000. Actual overhead was $870,000, and actual labor costs totaled $1,100,000. How much is the company's predetermined overhead rate to the nearest cent?

$.90 (900/1000)

Sofa Manufacturers applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period: Estimated annual overhead cost $1,500,000 Actual annual overhead cost $1,470,000 Estimated machine hours 300,000 Actual machine hours 290,000

$1,450,000 applied and $20,000 underapplied (1,500,000 / 300,000 = 5 OH Rate; 290,000 * 5 = 1,450,000 Applied; 1,470,000 - 1,450,000 = 20,000 Underapplied)

Cotton Mfg. provided the following information from its accounting records for 2012: Expected production 30,000 labor hours Actual production 28,000 labor hours Budgeted overhead $600,000 Actual overhead $580,000 How much is the overhead application rate if Cotton bases the rate on direct labor hours?

. $20.00 per hour (600,000 / 30,000)

For Wrought Iron Manufacturing, the predetermined overhead rate is 70% of direct labor cost. During the month, $300,000 of factory labor costs are incurred of which $80,000 is indirect labor. Actual overhead incurred was $160,000. The amount of overhead debited to Work in Process Inventory should be:

$154,000 (300,000 - 80,000 = 220,000; 220,000 * .7 = 154,000)

As of December 31, 2012, Leaf Manufacturing had $2,000 of raw materials inventory. At the beginning of 2012, there was $1,600 of materials on hand. During the year, the company purchased $274,000 of materials; however it paid for only $264,000. How much inventory was requisitioned for use on jobs during 2012?

$273,600 (1600+274000-x=2000, x=273600)

As of December 31, 2012, Grey Manufacturing had $2,500 of raw materials inventory. At the beginning of 2012, there was $2,000 of materials on hand. During the year, the company purchased $305,000 of materials; however, it paid for only $292,500. How much inventory was requisitioned for use on jobs during 2012?

$304,500 (2000+305000-x=2500, x=304500)

Percy, Inc. thinks machine hours is the best activity base for its manufacturing overhead. The estimate of annual overhead costs for its jobs was $820,000. The company used 1,000 hours of processing on Job No. B12 during the period and incurred overhead costs totaling $840,000. The budgeted machine hours for the year totaled 20,000. How much overhead should be applied to Job No. B12?

$41,000 (820,000 / 20,000 = 41 OH Rate; 41 * 1,000 = 41,000)

During 2012, Pavers Manufacturing expected Job No. 59 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Pavers applied overhead based on direct labor cost. Actual production required an overhead cost of $280,000, $550,000 in materials used, and $220,000 in labor. All of the goods were completed. How much is the amount of over- or underapplied overhead?

$50,000 overapplied (300,000/200,000=1.5OH Rate; 220,000*1.5 =330,000 Applied)

When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is

Finished Goods Inventory WIP Inventory

f actual overhead is less than applied manufacturing overhead, then manufacturing overhead

Overapplied

The entry to record the acquisition of raw materials on account is

Raw materials inventory AP

Which of the following would be accounted for using a job order cost system?

The construction of a new campus building

All of the following would be entries in assigning accumulated costs to the Work In Process Inventory except:

The purchase of raw materials

The predetermined overhead rate is based on the relationship between

estimated annual costs and expected annual activity.