Week Three

Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $424,000, and direct labor costs to be $2,120,000. Actual overhead costs for the year totaled $398,000, and actual direct labor costs totaled $1,860,000. At year-end, the balance in the Factory Overhead account is a:

$398,000 Debit balance

Mesa Corporation allocates overhead to production on the basis of direct labor costs. Mesa's total estimated overhead is $275,000 and estimated direct labor is $110,000. Determine the amount of overhead applied to a job which used $21,000 of direct labor.

$52,500

Dallas Company uses a job order costing system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead rate?

$7.50 per direct labor hour.

Using the following accounts and a predetermined overhead rate of 130% of direct labor cost, compute the amount of applied overhead. Work in Process Inventory DebitCredit Beginning35,200 Direct materials55,300 Direct labor? Overhead applied? Cost of goods manufacturing203,300 Ending25,200 Finished Goods Inventory DebitCredit Beginning5,200 Cost of Goods manufacturing203,300

$78,000.

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. Compute the amount of under- or overapplied overhead for the year.

10,000 underapplied

At the beginning of the year, a company estimates total direct materials costs of $1,800,000 and total overhead costs of $2,340,000. If the company uses direct materials costs as its activity base to apply overhead, what is the predetermined overhead rate it should use during the year?

130

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $292,500; materials of $415,000 and direct labor of $225,000. During the year Adams incurred $423,000 in materials costs, $415,100 in overhead costs and $229,000 in direct labor costs. Compute the predetermined overhead rate.

130.0

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 incurred. What is the balance in the Work in Process account at the end ofSeptember relative to Job A3B?

14,500

Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Cosi expects to incur $870,000 of overhead during the next period, and expects to use 57,000 labor hours at a cost of $10.00 per hour. What is Cosi Company's predetermined overhead rate?

153%

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 is $9,000. What is the total manufacturing cost of this job lot?

17,000

The ending inventory of finished goods has a total cost of $9,000 and consists of 600 units. If the overhead applied to these goods is $3,000, and the overhead rate is 75% of direct labor, how much direct materials cost was incurred in producing these units?

2,000

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $20,000; direct materials, $40,000; and factory overhead applied $5,000. The predetermined overhead rate was:

25.00%

A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required direct labor costing $21,000?

26,250

Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to be $420,000, and direct labor costs to be $210,000. Actual overhead costs for the year totaled $444,000, and actual direct labor costs totaled $236,000. At year-end, the balance in the Factory Overhead account is a:

28,000 Credit balance.

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $284,700; materials of $409,000 and direct labor of $219,000. During the year Adams incurred $417,000 in materials costs, $413,100 in overhead costs and $223,000 in direct labor costs. Compute the amount of overhead applied to jobs during the year.

289,900

If one unit of Product Z2 used $2.80 of direct materials and $3.30 of direct labor, sold for $11.00, and was assigned overhead at the rate of 33% of direct labor costs, how much gross profit was realized from this sale?

3.81

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What is the ending Raw Materials Inventory balance for March?

33,000

A company that uses job order costing reports the following information for March. Overhead is applied at the rate of 60% of direct materials cost. The company has no beginning Work in Process or Finished Goods inventories at March 1. 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 1Job 2Job 3 Direct materials used$ 13,800$ 17,800$ 6,800 Direct labor used$ 21,800$ 11,800$ 9,800 Determine the total dollar amount of Finished Goods Inventory at the end of March.

40,280

Finished goods inventory is $186,000. If overhead applied to these goods is $78,000, and the overhead rate is 120% of direct labor, how much direct materials cost was incurred in producing the inventory?

43,000

Minstrel Manufacturing uses a job order costing system. During the month, Minstrel purchased $189,000 of raw materials on credit; issued materials to production of $214,000 of which $11,000 were indirect. Minstrel incurred a factory payroll of $158,000, of which $21,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The total manufacturing costs added during the period is:

545,500

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 1Job 2Job 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.

61,440

CWN Company uses a job order costing system and last period incurred $80,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor cost. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:

75%

B&T Company's production costs for May are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production facility, $800; factory heat, lights and power, $1,000; and insurance on plant and equipment, $200. B&T Company's factory overhead incurred for May is:

8,500

The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory. Work in Process Inventory DebitCredit Beginning WIP6,400 Direct materials49,000 Direct labor31,500 Applied overhead17,700 To finished goods? Ending WIP12,700 The cost of jobs transferred to finished goods is:

91,900

Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs and allocates $18 of overhead for each employee hour worked. Direct materials are assigned to each job according to actual cost. If Job M-47 used $350 of direct materials and took 20 direct labor hours of labor to complete, what is the total cost that should be assigned to the job?

950

Clemens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $119,500 and $124,200, respectively. During the year, actual overhead was $106,600 and actual direct labor cost was $112,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include (Round predetermined overhead rate to nearest whole percentage.)

A credit to Cost of Goods Sold for $920.

A system of accounting for production operations that provides managers with information to control costs and set selling prices is called a(n):

Cost accounting system.

A company that makes which of the following types of products would best be suited for a job costing system?

Custom jewelry

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 rate of 150% of direct labor cost. The journal entry to record indirect labor cost is:

Debit Factory Overhead $40,000; credit Factory Wages Payable $40,000.

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 rate of 150% of direct labor cost. The journal entry to record the purchase of materials is:

Debit Raw Materials Inventory $198,000; credit Accounts Payable $198,000.

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 direct labor for the month is:

Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000.

A custom manufacturer completed Jobs 103 and 104. Job 103 cost $24,000 and was sold (on credit) for $40,000. Job 104 cost $30,000. The journal entry to record the sale of Job 103 consists of a:

Debit to Accounts Receivable $40,000; credit to Sales $40,000.

A job cost sheet includes:

Direct material, direct labor, and applied overhead.

Production activities for a customized product represent a(n):

Job

A document in a job order costing system that is a cost record maintained for each job is known as a(n

Job cost sheet.

Large custom aircraft manufacturers normally use:

Job order costing.

A type of production that yields customized products or services for each customer is called:

Job order production.

A perpetual record that is updated each time materials are purchased and each time materials are issued for use in production is called a(n):

Materials ledger card.

Job order costing would be used for all of the following except:

Production of standard running shoes

The amount by which overhead incurred during a period exceeds the overhead applied to jobs is:

Underapplied overhead