MBA 700 Homework 3

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: a. Debit to Work in Process by $15,000. b. Debit to Materials Inventory by $20,000. c. Debit to Work in Process by $20,000. d. Debit to Materials Inventory by $15,000.

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

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

b. direct labor hours

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

a. direct labor

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? a. $32,000 b. $22,500 c. $26,000 d. $16,000

b. $22,500 1. Calculate OH OH = Direct Labor * rate OH = ($6,500 * 200%) = $13,000 WIP = Direct Materials + Direct Labor + Overhead WIP = $3,000 + $6,500 + $13,000 WIP = $22,500

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. a. $440,000 b. $428,000 c. $415,000 d. $413,000

b. $428,000

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. $75 b. $85 c. $65 d. $55 e. $95

b. 85 Overhead costs = Direct Materials * rate OH = $6,000 * 150% = $9,000 Cost per bike = (Direct Materials + Direct Labor + Overhead costs)/number of bikes Cost of bike = ($6,000 + $2,000 + $9,000)/200 Cost of bike = $17,000/200 Cost of bike = $85

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 Work in Process Inventory $4,300; credit Factory Wages Payable $4,300. b. Debit Work in Process Inventory $24,600; credit Factory Wages Payable $24,600. c. Debit Payroll Expense $24,600; credit Factory Wages Payable $24,600. d. Debit Payroll Expense $24,600; credit Cash $24,600. e. Debit Work in Process Inventory $28,900; credit Factory Wages Payable $28,900.

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

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

b. manufacturing overhead

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? a. $12,000 b. $47,500 c. $34,000 d. $24,500

c. $34,000

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: a. $23,300 b. $47,570 c. $9,670 d. $2,270 e. $7,400

c. $9,670 Factory Overhead = Indirect labor + property taxes + factory heat, lights and power + insurance on plant & equipment Factory OH = $7,400 + $890 + 1,090 + 290 Factory OH = $9,670

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

c. using the predetermined overhead rate

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

d. High production volume.

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

d. Job order costing.

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

d. an accounting firm specializing in tax returns

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

d. manufacturing overhead

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

d. materials requisition form

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: a. Debit Factory Overhead; credit Factory Wages Payable b. Debit Factory Wages Payable; credit Factory Overhead c. Debit Supervisor Wage Expense; credit Factory Wages Payable d. Debit Supervisor Wage Expense; credit Factory Overhead

a. Debit Factory Overhead; credit Factory Wages Payable

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: a. Underapplied by $20,000 b. Overapplied by $20,000 c. Neither overapplied nor underapplied d. Underapplied by $200,000 e. Overapplied by $200,000

a. Underapplied by $20,000

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

a. each individual product

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

a. job cost sheet

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

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

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

c. job cost sheet

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

c. manufacturing overhead

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

c. raw materials inventory

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

d. job cost sheet

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

a. work in process inventory

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. a. $48,520 b. $98,240 c. $61,440 d. $36,800

c. 61,440 Jobs 1 and 3 to be calculated here Overhead costs = Direct Materials * rate OH = ($13,200 * 60%) + ($6,200 * 60%) OH = $11,640 WIP = Direct Materials + Direct Labor + Overhead costs WIP = ($13,200 + $6,200) + ($21,200 + 9,200) + $11,640 WIP = $61,440

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

c. Time ticket

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

c. factory depreciation expenses

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

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