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Exam 17: Job Order Costing

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Question 81

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Which of the following businesses is most likely to use a process costing system?

A) a baker producing cakes to order
B) a legal service provider
C) an audit service provider
D) a candy manufacturer

E) All of the above
F) B) and D)

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Question 82

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Which of the following is a reason why a job order costing system is appropriate for a custom furniture manufacturer?

A) The cost incurred for each job will differ as per the order specifications.
B) The direct costs incurred for each job are the same,only indirect costs vary.
C) The raw materials used have already been accounted for using process costing.
D) Custom furniture manufacturers produce large quantities of similar products.

E) C) and D)
F) All of the above

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Question 83

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Ivade,Inc.uses a predetermined overhead allocation rate of $75 per direct labor hour.In January,Ivade completed Job B23,which utilized 20 direct labor hours.Provide the journal entry to allocate overhead to the job.Omit explanation.

SES Manufacturing has finished production activities for the year.The company allocates manufacturing overhead based on direct labor costs.The company has provided the following information: $\begin{array}{|l|r|}\hline\text { Total manufacturing overhead costs estimated at the } & \\\text { beginning of the year }&\$ 147,000 \\\hline \text { Total direct labor costs estimated at the beginning of the } \\\text { year } & \$ 350,000 \\\hline \text { Total direct labor hours estimated at the beginning of the } \\\text { year } & 15,000 \text { direct labor hours } \\\hline\text { Actual manufacturing overhead costs for the year }& \$ 160,700 \\\hline \text { Actual direct labor costs for the year } & \$362,000\\\hline \text { Actual direct labor hours for the year } & 12,700 \text { direct labor hours }\\\hline\end{array}$ Based on the above data,calculate the unadjusted ending balance in the Manufacturing Overhead account.

Lakeside,Inc.estimated manufacturing overhead costs for the year at $370,000,based on 180,000 estimated direct labor hours.Actual direct labor hours for the year totaled 191,000.The manufacturing overhead account contains debit entries totaling $391,000.The Manufacturing Overhead for the year was ________.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Process costing rather than job order costing is more appropriate for service companies.

Warren Manufacturing began business on January 1.During its first year of operation,Warren worked on five industrial jobs and reported the following information at year-end: $\begin{array} { | l | r | r | r | r | r | } \hline & \textbf { Job 1 } & \textbf { Job 2 } & \textbf { Job 3 } & \textbf { Job 4 } & \textbf{ Job 5 } \\\hline \text { Direct Materials } & \$ 1,000 & \$ 7,500 &\$ 4300 & \$ 3000 & \$ 1,500 \\\hline \text { Direct Labor } & 12,000 & 20,000&13,900 & 12,600 & 800 \\\hline \text { Allocated Mfg. Overhead } & 1,500 & 6,000&2000 & 7900 & 200 \\\hline & & & & & \text { Not } \\\text { Job completed: } & \text { Jun 30 } & \text { Sep 1 } & \text { Oct 15 } & \text { Nov 1 } & \text { completed } \\\hline \text {Job sold: } & \text { Jul 10 } & \text { Sep 12 } & \text { Not sold } & \text { Not sold } & \text { N/A } \\\hline \text { Revenues: } & \$ 25,000 & \$ 39,000 & \text { N/A } & \text { N/A } & \text { N/A } \\\hline\end{array}$ What was the balance in Finished Goods Inventory at year-end?

Mira Financial Advisors provides accounting and finance assistance to customers in the retail business.Mira has four professionals on staff,plus an office with six clerical staff.Total compensation,including benefits,for the professional staff runs about $753,000 per year,and it normally has about 8300 billable hours per year.The professional staff keep detailed time sheets organized by client number.The total office and administrative costs for the year are $570,000. Mira allocates office and administrative costs to clients monthly,using a predetermined overhead allocation rate based on billable hours.During July,Mira's professionals spent 36 hours on their client,Riley Sales.Mira adds a 25% markup on its costs to calculate the amount billed to the customer.How much should the company charge Riley Sales for the month of July? (Round your intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Specialty Wood Products,Inc.had the following manufacturing labor costs last month: $\begin{array} { | l | r | } \hline \text { Woodworkers' wages } & \$ 100,000 \\\hline \text { Indirect laborers' wages } & 20,000 \\\hline \text { Maintenance personnel wages } & 10,000 \\\hline\end{array}$ Provide the journal entry to record the labor costs incurred,which will be paid at a later date.Omit explanation.

Lake Country Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances.Lake Country has four public relations specialists plus an office staff.At the beginning of the year,Lake Country estimated the total cost of salaries and benefits for the public relations specialists at $684,000 and a total of 7600 billable hours for the year.The office and administrative costs were estimated at $418,000.The allocation base for office and administrative costs is billable hours.In June,Lake Country signed a contract for a Russian ballet performance.It negotiated a price of $6500 for its services.When the job was complete,Lake Country's records showed that it had logged 36.0 billable hours.What was the amount of gross profit that Lake Country made on the job?

Jupiter Manufacturing began business on January 1.During its first year of operation,Jupiter worked on five industrial jobs and reported the following information at year-end: $\begin{array}{|l|r|r|r|r|r|} \hline& \text { Job 1 } & \text { Job 2 } & \text { Job 3 } & \text { Job 4 } & \text { Job 5 } \\\hline \text { Direct Materials } & \$ 1,000 & \$ 7,500 & \$ 4,000 & \$ 3,500 & \$ 1800 \\\hline \text { Direct Labor } & 12,000 & 20,000 & 13,000 & 12,000 & 900 \\\hline \text { Allocated Mfg. Overhead } & 1,500 & 6,000 & 2,500 & 7,500 & 200 \\\hline \text { Job completed: } & \text { Jun 30 } & \text { Sep 1 } & \text { Oct 15 } & \text { Nov 1 } &\text { not completed } \\\hline \text { Tob sold: } & \text { Jul 10 } & \text { Sep 12 } & \text { Not sold } & \text { Not sold } & \text { N/A } \\\hline \text { Revenues: } & \$ 25,000 & \$ 39,000 & \text { N/A } & \text { N/A } & \text { N/A }\\\hline\end{array}$ What was the balance in Work-in-Process Inventory at year-end?

On June 30,Caroline,Inc.finished Job 750 with total job costs of $4800 and transferred the costs to Finished Goods Inventory.On July 6,Caroline sold goods from Job 750 to a customer for $5100 cash.Which of the following is the correct entry needed to record the revenue earned? Assume the perpetual inventory system is used.

Which of the following correctly describes the term cost driver?

The accounts of Melissa Manufacturing showed the following balances at the beginning of December: $\begin{array} { | l | r | } \hline \text { Rccount } & \multicolumn{1}{|c|} { \text { Debit } } \\\hline \text { Raw Materials Inventory } & \$ 59,000 \\\hline \text { Work-in-Process Inventory } & 75,000 \\\hline \text { Finished Goods Inventory } & 30,000 \\\hline \text { Manufacturing Overhead } & 24,000 \\\hline\end{array}$ The following transactions took place during the month: December 2: Issued direct materials $39,000 and indirect materials $6000 to production. December 15: Incurred $5000 and $4000 toward factory's direct labor cost and indirect labor cost,respectively. What should be the balance in the Work-in-Process Inventory following these transactions?

Pandora Manufacturing purchased $95,000 of raw materials on account and $5,000 of raw materials for cash.The materials will be used to produce furniture.Provide the journal entry for the purchase of materials.Omit explanation.

When a job order costing system is used,actual manufacturing overhead costs are debited to ________.

Which of the following would most likely be accounted for using a job order costing system?

Pluto Travel Services provided the following information: Direct labor rate: $50 per hour Predetermined allocation rate for indirect costs: $22 per direct labor hour Pluto is negotiating a job with a new client.The job will require 11 hours of direct labor.If Pluto wishes to have at least a 15% gross profit on the revenues,it needs to record $716 of revenues.

On January 1,Frederic Manufacturing had a beginning balance in Work-in-Process Inventory of $163,000 and a beginning balance in Finished Goods Inventory of $23,000.During the year,Frederic incurred manufacturing costs of $200,000. During the year,the following transactions occurred: Job C-62 was completed for a total cost of $144,000 and was sold for $155,000. Job C-63 was completed for a total cost of $184,000 and was sold for $212,000. Job C-64 was completed for a total cost $81,000 but was not sold as of year-end. The Manufacturing Overhead account had an unadjusted credit balance of $24,000 and was adjusted to zero at year-end. What was the final balance in the Cost of Goods Sold account?

Venus Manufacturing uses a predetermined overhead allocation rate based on direct labor cost.At the beginning of the year,it estimated the manufacturing overhead rate to be 30% of the direct labor cost.In the month of June,Venus completed Job 13C and its details are as follows: $\begin{array} { | l | r | } \hline \text { Direct materials cost } & \$ 6820 \\\hline \text { Direct labor cost } & \$ 26,000 \\\hline \text { Direct labor hours } & 31 \text { hours } \\\hline \text { Units of product produced } & 200 \\\hline\end{array}$ What is the total cost incurred for Job 13C?