BMGT321 - Dynamic Study #4 Job Costing

Limte Builders, Inc. uses a normal costing system. The company uses direct labor-hours as the cost-allocation base. The following information is available for Limte Builders Inc.: Budgeted manufacturing overhead costs $2,100 Budgeted labor hours 600 Actual manufacturing overhead costs $1,800 Actual labor hours 450 Calculate the allocated direct manufacturing overhead costs of Job 43 if 40 direct-labor hours were used for the job.

$140.00 > The allocated manufacturing overhead costs of Job 43 if 40 direct-labor hours were used for the job is $140.00. First, compute the allocation rate = Budgeted manufacturing overhead costs / Budgeted labor hours = $2,100 / 600 = $3.50 Next, compute the Allocated manufacturing overhead for Job 43 = Allocation rate × Actual labor hours = $ 3.50 × 40= $140

A company uses an actual costing system. The company uses direct labor-hours as the cost-allocation base. The managerial accountant reported the following cost information: Actual indirect manufacturing costs $6,000 Actual quantity of direct manufacturing labor hours 1,000 Budgeted manufacturing overhead costs $6,500 Budgeted labor hours 1,200 Calculate the actual manufacturing overhead costs of Job WMN 456 if the company uses 30 direct labor hours on Job WMN 456.

$180.00 > The actual manufacturing overhead costs of Job WMN 456 if the company uses 30 direct labor hours on Job WMN 456 is $180.00. First, compute the actual manufacturing overhead rate. Actual manufacturing overhead rate = Actual annual manufacturing overhead costs / Actual annual quantity of the cost-allocation base (6,000 / 1,000) = $6.00 Next, compute the manufacturing overhead costs allocated to Job WMN 456: Actual manufacturing overhead rate × Actual quantity of direct manufacturing labor hours: ($6.00 × 30) = $180.00

Burton Company uses a normal costing system. The company uses direct labor-hours as the cost-allocation base. The following information is available for the company: Budgeted manufacturing overhead costs $2,000 Budgeted labor hours 800 Actual manufacturing overhead costs $1,500 Actual labor hours 500 Calculate the allocated direct manufacturing overhead costs of Job 56 if 10 direct-labor hours were used for the job.

$25.00 > The allocated manufacturing overhead costs of Job 56 if 10 direct-labor hours were used for the job is $25.00. First, compute the allocation rate = Budgeted manufacturing overhead costs / Budgeted labor hours = $2,000 / 800 = $2.50 Next, compute the Allocated manufacturing overhead for Job 10 = Allocation rate × Actual labor hours = $ 2.50 × 10= $25.00

The following information is available for Touchwood Corporatioa company: Budgeted manufacturing overhead $25,000 Actual manufacturing overhead $22,000 Budgeted direct labor hours 6,000 Actual direct labor hours 10,000 Calculate the budgeted manufacturing overhead rate if overhead is allocated on the basis of direct labor hours.

$4.17 > $25,000 / 6,000 = $4.17

The manager reported the following information: Total direct-labor costs $10,000,000 Total indirect costs $9,000,000 Total direct-labor hours 250,000 Calculate the budgeted direct-labor cost rate per direct-labor hour.

$40 > The budgeted direct-labor cost rate is $40 budgeted direct-labor cost. Budgeted direct-labor cost rate = Budgeted total direct-labor costs / Budgeted total direct-labor hours $10,000,000 / 250,000 = $10 per direct-labor hour

The manager reported the following information: Budgeted total direct-labor costs $14,000,000 Budgeted total indirect-labor costs $8,000,000 Budgeted total direct-labor hours 200,000 Compute the budgeted direct-labor cost rate per direct-labor hour.

$70 > The budgeted direct-labor cost rate is $70 budgeted direct-labor cost. Budgeted direct-labor cost rate = Budgeted total direct-labor costs / Budgeted total direct-labor hours $14,000,000 / 200,000 = $70 per direct-labor hour

Herbal Spice, Inc. uses an actual costing system. The company uses direct labor-hours as the cost-allocation base. The following information is available for Herbal Spice Inc.: Actual indirect manufacturing costs $4,200 Actual quantity of direct manufacturing labor hours 1,200 Budgeted manufacturing overhead costs $3,900 Budgeted labor hours 1,300 Calculate the actual manufacturing overhead costs of Job WMN 123 if the company uses 22 direct manufacturing labor hours on Job WMN 123.

$77.00 > The actual manufacturing overhead costs of Job WMN 123 if the company uses 22 direct labor hours on Job WMN 123 is $77.00. First, compute the actual manufacturing overhead rate. Actual manufacturing overhead rate = Actual annual manufacturing overhead costs / Actual annual quantity of the cost-allocation base (4,200 / 1,200) = $3.50 Next, compute the manufacturing overhead costs allocated to Job WMN 123: Actual manufacturing overhead rate × Actual quantity of direct manufacturing labor hours: ($3.50 × 22) = $77.00

Which of the following statements specifically defines a job-cost sheet?

A job-cost sheet is used to record and accumulate all the costs assigned to a particular job, starting when work begins.

What is the difference between actual costing systems and normal costing systems?

Actual costing systems use actual rates for allocating indirect costs and normal costing systems use budgeted rates for allocating indirect costs.

Which of the following statements is NOT true about allocating costs?

Allocating costs using the cause-and-effect criterion is used when a cost driver cannot be identified.

Identify the formula to calculate a budgeted indirect cost rate.

Budgeted annual indirect costs / Budgeted annual quantity of the cost allocation base

Identify the journal entry to record the allocation of $50,000 of manufacturing overhead to jobs in a normal costing system.

Dr. Work-in-Process Control $50,000 Cr. Manufacturing Overhead Allocated $50,000

Identify the journal entry to record usage of direct materials of $18,000 and indirect materials of $2,000 by a job in a normal costing system.

Dr. Work-in-Process Control 18,000 Dr. Manufacturing Overhead Control 2,000 Cr. Materials Control 20,000

Identify the journal entry to record usage of direct materials of $48,000 and indirect materials of $1,200 by a job in a normal costing system.

Dr. Work-in-Process Control 48,000 Dr. Manufacturing Overhead Control 1,200 Cr. Materials Control 49,200

Which of the following is a denominator reason for using longer periods to calculate the indirect-cost rate?

Longer periods avoid dissemination of monthly fixed indirect costs over fluctuating levels of monthly output and fluctuating quantities of the cost-allocation base.

Which of the following subsidiary ledgers is used to enable managers to view specific details of categories such as overhead costs of direct materials, indirect manufacturing labor, supervision and engineering, plant insurance and utilities, and plant depreciation?

Manufacturing Department Overhead Records

________ is debited when recording plant depreciation.

Manufacturing Overhead Control

Which of the following is TRUE of recording plant depreciation cost?

Manufacturing Overhead Control account is debited for the amount of depreciation on plant.

What transaction does the following journal entry represent? Dr. Work-in-Process Control $50,000 Cr. Manufacturing Overhead Allocated $50,000

The application of $50,000 of manufacturing overhead

Identify the criterion used when indirect costs are assigned using cost drivers.

The cause-and-effect relationship between a cost-allocation base and indirect costs

Which of the following is a numerator reason for using longer periods to calculate indirect cost rates?

The shorter the period, the greater is the influence of seasonal patterns on the amount of costs.

Which of the following statements best describes underallocated indirect costs?

Underallocated indirect costs occur when the allocated amount of indirect costs is less than the actual or incurred amount.

Actual costing systems use ________.

actual indirect cost rates

Each of the following organizations would most likely use job costing EXCEPT ________.

an oil refinery

Budgeted annual indirect costs / Budgeted annual quantity of the cost allocation base is the formula to compute the _______.

budgeted indirect cost rate