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Exam 2: Job Order Costing and Analysis

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Question 111

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Cost accounting systems used by manufacturing companies are based on the:

A) Periodic inventory system.
B) Perpetual inventory system.
C) Finished goods inventories.
D) Weighted average inventories.
E) LIFO inventory system.

F) A) and B)
G) A) and E)

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Question 112

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A job order costing system would best fit the needs of a company that makes:

A) Shoes and apparel.
B) Paint.
C) Cement.
D) Custom machinery.
E) Pencils and erasers.

F) B) and C)
G) None of the above

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Question 113

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A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:

The cost of all direct materials issued to production is debited to Work in Process Inventory.

A source document that an employee uses to report how much time was spent working on a job or on overhead activities and that is used to determine the amount of direct labor to charge to the job or to determine the amount of indirect labor to charge to factory overhead is called a:

In a job order costing system, indirect labor costs are debited to the Factory Overhead account.

The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:

Lock Production Co. applies factory overhead to production on the basis of direct labor costs. Assume that at the beginning of the current year the company estimated that direct material costs would be $178,800, direct labor costs would be $154,000, and factory overhead costs would be $231,000. (1) If the $28,000 cost of Lock's Work in Process inventory included $5,200 of direct labor cost, what amount of direct materials cost was included? (2) If $8,100 of the company's $34,300 finished goods inventory was direct materials cost, determine the direct labor cost and factory overhead cost of the finished goods inventory.

The job cost sheet for Job number 83-421 includes the following information: DIRECT MATERIALS: 7/12 Requisition R88-566: 20 units @ $ 3.50 per unit 7/13 Requisition R88-576: 18 units @ $ 5.00 per unit 7/13 Requisition R88-578: 4 units @ $25.00 per unit 7/14 Requisition R88-591: 40 units @ $ 1.25 per unit DIRECT LABOR: 7/12 Employee 19: 8 hours @ $ 9.00 per hour 7/13 Employee 19: 6 hours @ $ 9.00 per hour 7/13 Employee 37: 6 hours @ $ 7.00 per hour 7/14 Employee 19: 5 hours @ $ 9.00 per hour 7/14 Employee 92: 5 hours @ $11.00 per hour FACTORY OVERHEAD: Assigned at 150% of direct labor cost. What is the total cost of Job number 83-421?

A time ticket is a source document that an employee uses to report how much direct labor was performed for a job and is used to determine the amount of direct labor to charge to the job.

Job order production is also known as:

A job cost sheet is useful for developing financial accounting numbers but does not contain information that is useful for managing the production process.

Underapplied overhead is the amount by which overhead applied to jobs using the predetermined overhead rate exceeds the actual overhead incurred during a period.

A job cost sheet shows information about each of the following items except:

Job order costing systems normally use:

Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,500 of direct materials and used $4,000 of direct labor. The job was not finished by the end of the month, but needed an additional $3,000 of direct materials in October and additional direct labor of $6,500 to finish the job. 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?

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, $30,000; direct materials, $50,000; and factory overhead applied $6,000. The overhead application rate was: