FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 7: Job Costing

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

Travis Company's records show that overhead was overapplied by $10,000 last year.This overapplied overhead was closed out to the Cost of Goods Sold account at the end of the year.In trying to determine why overhead was overapplied by such a large amount,the company has discovered that $6,000 of depreciation on factory equipment was charged to administrative expense in error.Given the above information,which of the following statements is true?

A) Manufacturing overhead was actually overapplied by $16,000 for the year.
B) The company's net income is understated by $6,000 for the year.
C) Under the circumstances posed above,the error in recording depreciation would have no effect on operating income for the year.
D) The $6,000 in depreciation should have been charged to Work-in-Process rather than to administrative expense.

E) B) and D)
F) A) and B)

Correct Answer

verified

Show Answer

Question 2

Essay

Review LaterAdd Note

Review Later

Describe two alternative approaches to the handling of over- or underapplied overhead.

Correct Answer

verified

1)The over- or underapplied overhead can...

View Answer

Show Answer

Question 3

True/False

Review LaterAdd Note

The journal entry to apply manufacturing overhead costs to completed jobs credits either Applied Manufacturing Overhead or Manufacturing Overhead (Control).

Normal costing uses the actual allocation base activity to apply manufacturing overhead costs to jobs during the period.

At the beginning of the year,manufacturing overhead for the year was estimated to be $267,500.At the end of the year,actual direct labor-hours for the year were 22,100 hours,the actual manufacturing overhead for the year was $262,500,and manufacturing overhead for the year was overapplied by $13,750.If the predetermined overhead rate is based on direct labor-hours,then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate was:

Why is control of materials important from a managerial planning perspective?

At the end of the accounting period,manufacturing overhead costs are applied to uncompleted jobs using the same predetermined overhead rate that is used to apply manufacturing overhead costs to completed jobs.

Ramos Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year.Data for the most recently completed year appear below: $\begin{array}{|c|r|l|}\hline \begin{array}{l}\text { Estimates made at the beginning of } \\\text { the year: }\end{array} & & \\\hline \text { Estimated labor-hours } & 24,000 & \\\hline \begin{array}{l}\text { Estimated variable } \\\text { manufacturing owerhead }\end{array} & \$ 6.86 & \begin{array}{l}\text { per labor- } \\\text { hour }\end{array} \\\begin{array}{c}\text { Estimated total fteed } \\\text { manufacturing owerhead }\end{array} & \$ 394,560 & \\\hline \text { Actual labor-hours tor the year } & 24,500 & \\\hline\end{array}$ Required: Compute the company's predetermined overhead rate for the recently completed year.

Which of the following accounts is used to accumulate the actual manufacturing overhead costs incurred during a period?

Describe the difference between normal costing,actual costing,and standard costing.

The periodic allocation of manufacturing overhead costs to job cost sheets is based on an event,not a transaction.

Under Eagle Co.'s job order costing system,manufacturing overhead is applied to Work-in-Process using a predetermined annual overhead rate.During February,Eagle's transactions included the following: Eagle had neither beginning nor ending inventory in Work-in-Process Inventory.What was the cost of jobs completed in February? (CPA adapted) $\begin{array} { | l | r | } \hline \text { Direct materials issued to production } & \$ 90,000 \\\hline \text { Indirect materials issued to production } & 8,000 \\\hline \text { Manufacturing overhead incurred } & 125,000 \\\hline \text { Manufacturing overhead applied } & 113,000 \\\hline \text { Direct labor costs } & 107,000 \\\hline\end{array}$

Reyes Corporation applies overhead using an actual costing approach.Budgeted factory overhead was $266,400,budgeted machine-hours were 18,500.Actual factory overhead was $287,920,actual machine-hours were 19,050.How much is the over- or underapplied overhead?

Most major projects require budget and completion stage revisions at certain intervals due to their inherent uncertainty.

Compute the Work-in-Process transferred to the finished goods warehouse on April 30 using the following information: $\begin{array} { | l | r | } \hline \text { Work-In-Process Inventory, April } 30 & \$ 175 \\\hline \text { Direct material purchased during April } & 150 \\\hline \text { Work-In-Process Inventory, April } 1 & 200 \\\hline \text { Direct labor costs incurred } & 300 \\\hline \text { Manufacturing overhead costs } & 250 \\\hline \text { Direct materials used in production } & 125 \\\hline\end{array}$

During July,Morris Corporation purchased $76,000 of raw materials on credit to add to its raw materials inventory.A total of $81,000 of raw materials was requisitioned from the storeroom for use in production.These requisitioned raw materials included $5,000 of indirect materials.Required: Prepare journal entries to record the purchase of materials and their use in production.

Grayson Inc.has provided the following data for the month of October.The balance in the Finished Goods inventory account at the beginning of the month was $49,000 and at the end of the month was $45,000.The cost of goods manufactured for the month was $226,000.The actual manufacturing overhead cost incurred was $74,000 and the manufacturing overhead cost applied to Work-in-Process was $70,000.The adjusted cost of goods sold that would appear on the income statement for October is:

Manufacturing overhead applied on the basis of direct labor-hours was $120,000,while actual manufacturing overhead incurred was $124,000 for the month of April.Which of the following is always true given the statement above?

Service organizations,by their nature,cannot have a balance in Work-in-Process Inventory.

Before prorating the manufacturing overhead costs at the end of 2016,the Cost of Goods Sold and Finished Goods Inventory had applied overhead costs of $57,500 and $20,000 in them,respectively.There was no Work-in-Process at the beginning or end of 2016.During the year,manufacturing overhead costs of $74,000 were actually incurred.The balance in the Applied Manufacturing Overhead was $77,500 at the end of 2016.If the under- or overapplied overhead is prorated between Cost of Goods Sold and the inventory accounts,how much will be the Cost of Goods Sold after the proration?