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Exam 19: Job Order Costing

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Question 31

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A system of accounting for production operations that produces timely information about inventories and manufacturing costs per unit of product is a:

A) General accounting system.
B) Manufacturing accounting system.
C) Production accounting system.
D) Finished goods accounting system.
E) Cost accounting system.

F) A) and E)
G) C) and D)

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Question 32

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When Factory Wages Payable costs for labor are allocated in a job cost accounting system:

A) Cost of Goods Manufactured is debited and Direct Labor is credited.
B) Factory Wages Payable is debited and Work in Process Inventory is credited.
C) Work in Process Inventory is debited and Factory Overhead is credited.
D) Work in Process Inventory and Factory Overhead are debited and Factory Wages Payable is credited.
E) Direct Labor and Indirect Labor are debited and Factory Wages Payable is credited.

F) A) and B)
G) A) and C)

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Question 33

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Job order costing is applicable to manufacturing firms only and not service firms.

Both direct and indirect labor costs are recorded on the individual job cost sheets.

The two basic types of cost accounting systems are:

A company that uses a cost accounting system normally has only two inventory accounts: Finished Goods Inventory and Work in Process Inventory.

The journal entry to record the usage of Indirect Materials includes a debit to Work in Process Inventory.

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

An example of direct labor cost is:

Material amounts of under- or overapplied factory overhead are always closed entirely to Cost of Goods Sold at the end of an accounting period.

When actual overhead cost exceeds the overhead applied, overhead is said to be underapplied.

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs. -Compute the overhead application rate.

A company's file of job cost sheets for jobs that are not yet completed equals the balance in the Work in Process Inventory account.

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

Using the following accounts and an overhead rate of 130% of direct labor cost, compute the amount of applied overhead.

Features of a job costing system include all but which of the following:

The journal entry to record the usage of Direct Materials includes a debit to Work in Process Inventory.

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. - The journal entry to record the factory payroll is:

A company's file of job cost sheets for jobs that are completed but not yet sold equals the balance in the Finished Goods Inventory account.

A company's job order costing system applies overhead based on direct labor cost. The company's estimated production costs for were: direct labor, $57,600; direct materials, $76,800; and factory overhead, $9,600. Calculate the company's overhead rate.