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Exam 17: Job Order Cost Systems and Overhead Allocations

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Question 1

True/False

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If the manufacturing overhead account at month end has a credit balance before adjustment,this indicates that overhead is under-applied.

A) True
B) False

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Question 2

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The year-end balance in the Materials Inventory controlling account is equal to:

A) The total of the various materials subsidiary ledger accounts (the materials on hand at the end of the period.)
B) The total amount of materials requisitioned during the period.
C) The total amount of materials purchased during the period.
D) The amount of materials debited to the Work-in-Process Inventory account during the period.

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

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Question 3

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The basic types of cost accounting systems are:

The account Finished Goods:

Job order cost system-journal entries Paxton Products,which uses a job order cost system,completed the following transactions during the current month: (A)Materials costing $75,000 were used on various jobs. (B)Time cards of direct workers indicate direct labor costs of $125,000 for the month. (C)Overhead is applied to jobs at a rate of 75% of direct labor cost. (D)Jobs with total accumulated costs of $165,000 were finished during the month. (E)Units costing $210,000 were sold during the month at sales prices totaling $390,000.All sales were on account. In the space provided,prepare a general journal entry for the month summarizing each of the above categories of transactions.Explanations may be omitted.

Job order cost system-journal entries Shown below is a partial list of accounts for Miles Mfg.Co.,followed by a list of transactions.Indicate the accounts that would be debited and credited in recording each transaction by placing the appropriate account numbers in the space provided.The company uses a job order cost accounting system.

An increase in an activity base must cause an increase in actual overhead costs incurred for that base to be considered a cost driver.

The two steps required in activity-based costing are identifying separate activity cost pools and allocating each cost pool to the product using an appropriate cost driver.

In activity-based costing,only one cost driver should be used in applying overhead.

Activity-based costing systems always result in more accurate measurements of unit costs.

Debits to the Manufacturing Overhead account record:

Overhead costs are assigned to production using an overhead application rate,whereas no such "application rate" is used to assign the costs of direct materials and direct labor to production.The reason for this difference in procedures is that:

Under a job order cost system,costs are accumulated for:

A job cost sheet will include:

A job order cost system would be suitable for which of the following:

Manufacturing overhead is:

Application of overhead - missing information Holden Corporation manufactures a single product.Overhead is applied to production during the year using a predetermined rate based on direct labor cost.During the month of April,50,000 units of output were produced at a total direct labor cost of $425,000.The amount of overhead applied to these units was $2,125,000.Assuming total direct labor cost for the year had been estimated to be $4,125,000,calculate the amount of manufacturing overhead Holden Corporation had estimated it would incur during the year. What is estimated total manufacturing overhead cost for the year?

Application of overhead Pyramid Corporation manufactures a single product.As a basis for determining an overhead application rate,the production manager made the following estimates for the coming year: In the following month,19,500 units were produced,involving direct labor costs of $78,000 and requiring 1,073 machine-hours. Determine the amount of manufacturing overhead to be applied to production during this month,assuming that the overhead application rate is based upon: (a)Estimated total direct labor cost for the year.$___________ (b)Estimated total machine-hours for the year.$___________

Which of the following is an advantage of developing a predetermined overhead application rate?

Metalworks applies manufacturing overhead on the basis of direct materials used in production.During the current period,direct materials used for job #123 amounted to $22,545.If Metalworks' overhead rate is 0.65 of direct materials used,the overhead applied to job #123 for the period was $15,000. Correct answer would have been $22,545 × 0.65 = $14,654.25