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Exam 19: Job Order Costing

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Question 71

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The job order costing system is used by service firms to determine revenues, expenses, and ultimately profit.

A) True
B) False

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Question 72

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The direct labor and overhead costs of providing services to clients are accumulated in:

A) finished services expense
B) work in process
C) administrative salaries expense
D) overhead

E) None of the above
F) A) and B)

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Question 73

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The current year's advertising costs are normally considered period costs.

The Cavy Company estimates that the factory overhead for the following year will be $1,250,000. The company has decided that the basis for applying factory overhead should be machine hours, which is estimated to be 40,000 hours. The machine hours for the month of April for all of the jobs was 4,780. If the actual factory overhead totaled $141,800, determine the over or under applied amount for the month.

Cranston Company estimates the following overhead costs for the coming year: Equipment depreciation $160,000 Equipment maintenance 60,000 Supervisory salaries 40,000 Factory rent 100,000 Total $360,000 Cranston is also budgeting $600,000 in direct labor costs and 15,000 machine hours for the coming year. Required: a. Calculate the predetermined overhead rate using direct labor costs as the allocation base. b. Calculate the predetermined overhead rate using machine hours as the allocation base.

Which of the following would most likely use a job order costing system?

The controlling account for the cost ledger is:

In a job order cost accounting system, when goods that have been ordered are received, the receiving department personnel count, inspect the goods, and complete a:

When job 711 was completed, direct materials totaled $4,000; direct labor, $5,600; and factory overhead, $2,400 respectively. Units produced totaled 1,000. Unit costs are:

Which of the following entries would probably not be found on the books of a service provider?

A law firm would use a job order cost system to accumulate all of the costs associated with a particular client engagement, such as lawyer time, copying charges, filing fees, and overhead.

The following is a list of costs incurred by several business organizations: Classify each of the preceding costs as product costs or period costs. For those costs classified as product costs, indicate whether the product cost is a direct materials cost, direct labor cost, or factory overhead cost. For those costs classified as period costs, indicate whether the period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer. Place an X in the appropriate column.

The cost of production of completed and finished goods during the period amounted to $450,000, and the finished products shipped to customers had total production costs of $357,000. From the following, select the entry to record the transfer of costs from work in process to finished goods.

Period costs are

Zeke Company is a manufacturing company that has worked on several production jobs during the 1st quarter of the year. Below is a list of all the jobs for the quarter: Job 356, 357, 358 & 359 were completed. Jobs 356 & 357 were sold at a profit of $500 on each job. What is the ending balance of Cost of Goods sold for Zeke Company as of the end of the 1st quarter?

The entry to record the flow of direct labor costs into production in a job order cost accounting system is:

Which types of inventories does a manufacturing business report on the balance sheet?

For which of the following businesses would the job order cost system be appropriate?

Each account in the cost ledger is called a:

The Stamping Department accepted Job 051507A on May 15th to make 1,000 funnels. To complete the job they requisitioned 1,100 sheets at $1.20 per sheet and 1,150 grommets at $0.15 per set. The cost driver that the Stamping Department uses is drop-forge strokes which are counted on a machine mounted counter. $2.25 is applied as overhead for each drop-forge stroke. Additionally $375.00 of overhead is applied to each job due to setup and teardown. Direct labor is applied at $22.50 per hour for the machine operator and $11.10 for the machine loader. The job required 6 1/2 hours of labor by the team. When the job was complete Job 051507A was transferred to Semi-finished Goods Inventory (SFGI). When the job was transferred, 20 sheets were returned unused to raw material inventory, 75 grommet sets were returned, and there were 1,115 strokes on the counter.