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Exam 2: Job Order Costing

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Question 31

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For a manufacturing business, products that are in the process of being manufactured are referred to as

A) supplies inventory
B) work in process inventory
C) finished goods inventory
D) direct materials inventory

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

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Question 32

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Period costs are costs that are incurred for the production requirements of a certain period.

A) True
B) False

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Question 33

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Discuss the use of job order costing for professional services businesses.  What are the similarities and differences between service and manufacturing business job order costing?

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. Factory overhead applied to production was $32,000. The entry to record the actual factory overhead costs incurred is

Selected accounts with some amounts omitted are as follows If the balance of Work in Process on October 31 is $21,000, what was the amount of factory overhead applied in October?

Each account in the work in process subsidiary ledger in a job order costing system is called a job cost sheet.

Job order cost systems can be used to compare unit costs of similar jobs to determine if costs are staying within expected ranges.

Technics Inc., a manufacturing company, utilizes job order costing.  Each division establishes its own estimates regarding overhead, which are as follows: If Division A allocates overhead on the basis of machine hours, and Division B allocates overhead as a percentage of direct labor costs, what would the predetermined overhead rate be for each division?

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?

When a job is completed in a service organization, the job costs are transferred to the

Flagler Company allocates overhead based on machine hours.  It estimated overhead costs for the year to be $420,000.  Estimated machine hours were 50,000.  Actual hours and costs for the year were 46,000 machine hours and $380,000 of overhead. (a) Calculate the overhead application rate for the year. (b) What is the amount of applied overhead for the year? (c) What is the amount of under or overapplied overhead for the year? Indicate whether it is over or underapplied.

The following is a list of costs incurred by several business organizations: (a) Telephone cable for a telephone company (b) Membership fees for a health club for executives (c) Salary of the director of internal auditing (d) Long-distance telephone bill for calls made by salespersons (e) Carrying cases for a manufacturer of video camcorders (f) Cotton for a textile manufacturer of blue jeans (g) Bandages for the emergency room of a hospital (h) Cost of company holiday party (i) Electricity used to operate factory machinery (j) State unemployment compensation taxes for factory workers (k) Gloves for factory machine operators (l) Fees paid for lawn service for office grounds (m) Salary of secretary to vice-president of finance (n) Salary of secretary to vice-president of marketing (o) Production supervisor's salary (p) Engine oil for manufacturer and distributor of motorcycles (q) Oil lubricants for factory plant and equipment (r) Cost of a radio commercial (s) Depreciation on factory equipment (t) Wages of checkout clerk in company-owned retail outlet (u) Maintenance and repair costs for factory equipment (v) Depreciation on office equipment (w) Bonuses paid to salespersons (x) Insurance on factory building (y) Training for accounting personnel on use of microcomputer (z) Steel for a construction contractor 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 debit to factory overhead for the cost of indirect materials is obtained from the summary of the materials requisitions.

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and expected direct labor hours of 9,500 for the current fiscal year. If job number 117 incurs 2,300 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

Present entries to record the following summarized operations related to production for a company using a job order cost system:

Which of the following is the formula to calculate the predetermined factory overhead rate?

A difference in quantity of materials used on two comparable jobs may be caused by

In a factory with several processing departments, a single factory overhead rate may not provide accurate product costs and effective cost control.

In the job order costing system, the finished goods account is the controlling account for the factory overhead ledger.

Bar code scanners are now being used to track incoming materials and to electronically transmit this data. Scanners have replaced which of the following?