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Job Costing Chapter 4 1. Job costing information is used: A. to develop strategies B. to make pricing decisions C.

. for external financial reporting D. All of these answers are correct. In a costing system: A. cost tracing allocates indirect costs B. cost allocation assigns direct costs C. a cost-allocation base can be either financial or nonfinancial D. a cost object should be a product and not a department or a geographic territory Assigning direct costs to a cost object is called: A. cost allocation B. cost assignment C. cost pooling D. cost tracing Job costing: A. can only be used in manufacturing B. records the flow of costs for each customer C. allocates an equal amount of cost to each unit made during a time period D. is commonly used when each unit of output is identical Actual costing is a costing method that allocates______________ indirect costs. A. actual B. budgeted C. estimated D. predetermined When using a normal costing system, manufacturing overhead is allocated using the __________ manufacturing overhead rate and the __________ quantity of the allocation base. A. budgeted, actual B. budgeted, budgeted C. actual, budgeted D. actual, actual In a normal costing system, the Manufacturing Overhead Control account: A. is increased by allocated manufacturing overhead B. is credited with amounts transferred to Work-in-Process C. is decreased by allocated manufacturing overhead D. is debited with actual overhead costs

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THE FOLLOWING DATA APPLY TO ITEMS 8-12: Welton Manufacturing Company prepares its montly income statements on the basis of ACTUAL costs for the period. The companys accounting records show the following operating results for the month ending May 31, 2XXX: Sales .................................................................................................... $500,000 Purchases of direct materials .............................................................. Direct manufacturing labor................................................................. Indirect manufacturing labor .............................................................. Total manufacturing overhead incurred ............................................. Marketing and administrative costs .................................................... Inventory data May 1 Direct materials ..................................................$8,000 Work-in-process ...................................................7,000 Finished goods ...................................................18,000

95,000 180,000 15,000 74,000 100,000

May 31 $13,000 9,000 10,000

The company uses a pre-determined overhead rate to apply overhead cost to jobs. The rate for the year was $10 per machine hours; a total of 7,500 machine hours was recorded during the month. 8. The amount of direct materials used during the month is A. $90,000 B. $95,000 C. $100,000 D. $105,000 The amount of NORMAL cost of goods manufactured during the month are A. $362,000 B. $343,000 C. $180,000 D. $350,000 For the month, factory overhead cost was A. Under-applied by $2,000. B. Under-applied by $1,000. C. Over-applied by $2,000. D. Over-applied by $1,000. The amount of cost of goods sold after adjusting for over- or under-applied overhead is A. $350,000 B. $351,000 C. $352,000 D. $349,000
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Weltons operating income for the month is A. $51,000 B. $49,000 C. $50,000 D. $52,000

QUESTIONS 13 THROUGH 17 ARE BASED ON THE INFORMATION CONTAINED IN THE T-ACCOUNTS SHOWN BELOW: Raw Materials Bal. 10,000 (a) 70,000 (b) 60,000 Work in Process Bal. 20,000 (f) 250,000 (b) 50,000 (c) 80,000 (e) 160,000 Finished Goods Bal. 30,000 (g) 270,000 (f) 250,000

Cost of Goods Sold (g) 270,000

Accounts Payable (a) 70,000 (d) 140,000

Manufacturing Overhead (b) 10,000 (c) 20,000 (d) 140,000 (e) 160,000

Wages Payable (c) 100,000

Accounts Receivable (k) 400,000

Sales (k) 400,000

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The amount of inventory of raw materials at the end of the period is A. $40,000 B. $60,000 C. $20,000 D. $30,000 The amount of direct materials used during the period is A. $40,000 B. $30,000 C. $50,000 D. $60,000

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The amount of indirect labor cost incurred during the period is A. $80,000 B. $10,000 C. $20,000 D. $100,000 Manufacturing overhead is A. $160,000 over applied B. $170,000 under applied C. $10,000 under applied D. $10,000 over applied. Under- or over-applied manufacturing overhead is closed to Cost of Goods Sold. What is the amount of cost of goods sold after the manufacturing overhead account has been closed? A. $270,000 B. $280,000 C. $290,000 D. $300,000 The amount of gross profit (margin) after adjustment for any over- or under-applied manufacturing overhead was A. $270,000 B. $120,000 C. $170,000 D. $50,000

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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 19 AND 22: Rhett Company has two departments, Machining and Assembly. The following estimates are for the coming year: Machining Assembly Manufacturing overhead $200,000 $400,000 Direct manufacturing labor-hours 2,000 50,000 Machine-hours 40,000 3,000 Overhead is allocated to production on the basis of machine hours in Machining and direct manufacturing labor hours in Assembly. One of the jobs, Job #234, was started and completed in January. The job sold for $50,000. The job cost record for Job 234 shows the following costs Machining $10,000 $500 20 1,000
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Direct materials Direct manufacturing labor cost Direct manufacturing labor-hours Machine-hours

Assembly $1,000 $10,000 500 25

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The overhead allocation rates in Machining and Assembly departments, respectively, are A. $5 per machine hour and $8 per direct labor-hour B. $8 per machine hour and $8 per direct labor-hour C. $8 per machine hour and $5 per direct labor-hour D. None of these answers is correct. The amount of total costs added to the job in the Machining Department was A. $15,000 B. $14,500 C. $29,500 D. None of these answers is correct. The amount of total costs added to the job in the Assembly Department was A. $15,000 B. $14,500 C. $29,500 D. None of these answers is correct. The amount of profit margin or gross profit from Job 234 was A. $19,050 B. $38,000 C. $29,500 D. $20,500

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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 23 AND 24


Abernathy Company used a budgeted indirect-cost rate for its manufacturing operations. The balances (before adjustments or closing) in selected accounts at the end of 2012 are shown below: Manufacturing Overhead Allocated ............................... $220,000 Manufacturing Overhead Control .................................. $225,000 Work in Process Inventory Control ............................... $10,000 Finished Goods Inventory Control................................. $20,000 Cost of Goods Sold ........................................................ $170,000 23. What is the journal entry used to write off the difference between allocated and actual overhead directly to cost of goods sold? A. Manufacturing Overhead Allocated 200,000 Cost of Goods Sold 25,000 Manufacturing Overhead Control 225,000 B. Manufacturing Overhead Control 200,000 Cost of Goods Sold 25,000 Manufacturing Overhead Allocated 225,000 C. Manufacturing Overhead Allocated 200,000 Work-in-Process Control 30,000 Cost of Goods Sold 170,000 D. Manufacturing Overhead Control 225,000 Work-in-Process Control 55,000 Cost of Goods Sold 170,000 What is the journal entry used to write off the difference between allocated and actual overhead using the proration approach based on the unadjusted balances in the related accounts? A. Manufacturing Overhead Allocated 200,000 Work-in-Process Control 10,000 Finished Goods Control 20,000 Manufacturing Overhead Control 230,000 B. Manufacturing Overhead Allocated 225,000 Work-in-Process Control 1,250 Finished Goods Control 2,500 Cost of Goods Sold 21,250 Manufacturing Overhead Control 200,000 C. Manufacturing Overhead Control 225,000 Work-in-Process Control 1,250 Finished Goods Control 2,500 Cost of Goods Sold 21,250 Manufacturing Overhead Allocated 200,000 D. Manufacturing Overhead Allocated 200,000 Work-in-Process Control 1,250 Finished Goods Control 2,500 Cost of Goods Sold 21,250 Manufacturing Overhead Control 225,000

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QUESTIONS 25 THROUGH 27 ARE BASED ON THE FOLLOWING DATA: Chirico Manufacturing Company uses job costing system. The following job cost records were provided for January, the companys first month of operations: Job 1 $100 300 300 $700 01/02 01/18 01/20 Job 2 $400 600 600 $1,600 01/10 01/20 01/25 Job 3 $300 200 200 $700 01/20 01/30 02/02 Job 4 $200 500 500 $1,200 01/25 02/02 02/05 Job 5 $400 100 100 $600 01/22 02/10 02/15

Direct materials use Direct labor costs Allocated overhead Total Date started Date completed Date delivered to customer 25.

The amount of cost of goods manufactured for January is A. $4,800. B. $3,000. C. $2,300. D. $1,800. The amount of cost of goods sold for January is A. $4,800. B. $3,000. C. $2,300. D. $1,800. The amount of ending work in process as of January 31st is A. $3,000. B. $2,300. C. $1,800. D. $4,800.

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SUGGESTED ANSWERS

Q 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

A D C D B A A D A B D A C C C C C B B A B A D A D B C C